UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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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
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NTS-PROPERTIES PLUS LTD.
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(Exact name of the registrant as specified in its charter)
Florida 61-1126478
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
10172 Linn Station Road
Louisville, Kentucky 40223
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (502) 426-4800
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Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:
Limited Partnership Interests
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
Exhibit Index: See page 47
Total Pages: 51
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TABLE OF CONTENTS
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Pages
PART I
Items 1 and 2. Business and Properties 3-15
Item 3. Legal Proceedings 15
Item 4. Submission of Matters to a Vote
of Security Holders 15
PART II
Item 5. Market for the Registrant's Limited Partnership
Interests and Related Partner Matters 16
Item 6. Selected Financial Data 17
Item 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 18-27
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk 28
Item 8. Financial Statements and Supplementary
Data 29-43
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 44
PART III
Item 10. Directors and Executive Officers of
the Registrant 45
Item 11. Management Remuneration and Transactions 46
Item 12. Security Ownership of Certain Beneficial
Owners and Management 46
Item 13. Certain Relationships and Related Transactions 46
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K 47-50
Signatures 51
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PART I
Items 1 and 2. Business and Properties
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Development of Business
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NTS-Properties Plus Ltd. (the "Partnership") is a limited partnership which was
organized under the laws of the State of Florida on April 30, 1987. The General
Partner is NTS-Properties Plus Associates (a Kentucky limited partnership). As
of December 31, 1999 the Partnership owned the following properties:
- A joint venture interest in Blankenbaker Business Center 1A, a
business center with approximately 50,000 net rentable ground
floor square feet and approximately 50,000 net rentable
mezzanine square feet located in Louisville, Kentucky.
NTS-Properties Plus Ltd. contributed the completed building to
the joint venture between the Partnership and NTS-Properties
VII, Ltd., an affiliate of the General Partner of the
Partnership. It had previously acquired the completed building
from an affiliate of the Partnership. In 1994, NTS-Properties
IV, Ltd., ("NTS-Properties IV"), an affiliate of the General
Partner of the Partnership, was admitted as a partner to the
joint venture. The Partnership's percentage interest in the
joint venture was 39% at December 31, 1999.
- A joint venture interest in the Lakeshore/University II Joint
Venture (L/U II Joint Venture). The L/U II Joint Venture was
formed on January 23, 1995 among the Partnership and
NTS-Properties IV, NTS-Properties V and NTS/Ft. Lauderdale,
Ltd., affiliates of the General Partner of the Partnership.
The Partnership's percentage interest in the joint venture was
8% at December 31, 1999. A description of the properties owned
by the L/U II Joint Venture appears below:
- Lakeshore Business Center Phase I - a business center
---------------------------------
with approximately 103,000 net rentable square feet
located in Fort Lauderdale, Florida, acquired
complete by the joint venture.
- Lakeshore Business Center Phase II - a business
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center with approximately 97,000 net rentable square
feet located in Fort Lauderdale, Florida, acquired
complete by the joint venture.
- Outparcel Business Site - approximately 3.8 acres of
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land adjacent to the Lakeshore Business Center
Development, upon which construction of Lakeshore
Business Center Phase III has commenced.
The joint ventures in which the Partnership is a partner had a fee title
interest in the above properties. The General Partner believes that the
Partnership's properties are adequately covered by insurance.
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Development of Business - Continued
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As of December 31, 1999, the Partnership's properties were encumbered by
mortgages as shown in the table below:
Interest Maturity Balance
Property Rate Date at 12/31/99
------- ---- ---- -----------
Blankenbaker Business Center 1A 8.5% 11/15/05 (1) $1,203,015(2)
Lakeshore Business Center
Phase I 8.125 08/01/08 (3) $ 381,657
Lakeshore Business Center
Phase II 8.125 08/01/08 (3) $ 410,622
(1) Current monthly principal payments are based upon an 11-year
amortization schedule. At maturity, the mortgage will have been repaid
based on the current rate of amortization.
(2) This amount represents the Partnership's proportionate interest in the
mortgage payable at December 31, 1999. The outstanding balance of the
mortgage at December 31, 1999 was $3,121,473.
(3) Current monthly principal payments are based upon a 12-year
amortization schedule. At maturity, the mortgage will have been repaid
on the current rate of amortization.
(4) This amount represents the Partnership's proportionate interest in the
mortgage payable at December 31, 1999. The outstanding balance of the
mortgage at December 31, 1999 was $4,543,531 for Phase I and $4,888,353
for Phase II.
Currently, the Partnership's plans for renovations and other major capital
expenditures include tenant improvements at the Partnership's properties as
required by lease negotiations. Changes to current tenant finish improvements
are a typical part of any lease negotiation. Improvements generally include a
revision to the current floor plan to accommodate a tenant's needs, new
carpeting and paint and/or wallcovering. The extent and cost of the improvements
are determined by the size of the space being leased and whether the
improvements are for a new tenant or incurred because of a lease renewal. The
tenant finish improvements will be funded by cash flow from operations, cash
reserves or additional financing where necessary.
On July 23, 1999, the L/U II Joint Venture closed on the sale of 2.4 acres of
land adjacent to the Lakeshore Business Center for the purchase price of
$528,405. The Partnership reflects an approximate $7,900 gain associated with
this sale and expects to use the net proceeds from the sale of the land to help
fund the construction of Lakeshore Business Center III.
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Development of Business - Continued
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As of December 31, 1999, the L/U II Joint Venture has a commitment, pursuant to
a contract signed December 6, 1999, to construct a building to be known as
Lakeshore Business Center Phase III on the 3.8 acres of land it owns at the
Lakeshore Business Center development. Site work began in December 1999 and
shell construction began first quarter 2000. The construction costs are
currently estimated to be $4,000,000 and will be funded by a $1,737,000 capital
contribution from NTS-Properties V made in July 1999 and approximately
$2,680,000 debt financing obtained subsequent to December 31, 1999. The
Partnership and NTS-Properties IV, which prior to July 1, 1999 had a 12% and 18%
interest respectively in the L/U II Joint Venture were 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
agreed that NTS- Properties V would make the capital contribution to the L/U II
Joint Venture with the knowledge that their Joint Venture interest would, as a
result, decrease to 8% and 12% respectively. (See Item 8 Note 13 for information
of debt financing obtained by the Partnership for the construction of Lakeshore
Business Center Phase III).
The Partnership had no other material commitments for renovations or capital
improvements at December 31, 1999.
Financial Information About Industry Segments
- ---------------------------------------------
The Partnership has been engaged solely in the business of developing,
constructing, owning and operating commercial real estate. A presentation of
information concerning industry segments is not applicable. See Note 12 in Item
8 for information regarding the Partnership's operating segments.
General
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The current business of the Partnership is consistent with the original purpose
of the Partnership which was to acquire, directly or by joint venture,
unimproved or partially improved land, to construct and develop thereon business
and commercial centers, business parks, industrial and office buildings,
apartment complexes and/or retail centers, and to own and operate the completed
properties. The original purpose of the Partnership also includes the ability by
the Partnership to invest in fully improved properties, either directly or by
joint venture. The Partnership's properties are in a condition suitable for
their intended use.
The Partnership intends to hold the Joint Venture interests until such time as
sale or other disposition appears to be advantageous with a view to achieving
the Partnership's investment objectives, or it appears that such objectives will
not be met. In deciding whether to sell a Joint Venture interest, the
Partnership will consider factors such as potential capital appreciation, cash
flow and federal income tax considerations, including possible adverse federal
income tax consequences to the Limited Partners.
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General - Continued
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The Partnership currently holds minority interests in three 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
interest further decline as a result of the contributions made by the
financially stronger majority interest affiliated partnership.
Prior to December 31, 1999, NTS Development Company agreed to defer amounts owed
to it by the Partnership. NTS Development Company, an affiliate of the General
Partner (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 Development Company did
not extend the commitment past January 1, 2000.
NTS Development Company 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.
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. The Partnership is evaluating alternatives and
expects to decide on a course of action during the second quarter of 2000.
Blankenbaker Business Center 1A
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Sykes HealthPlan Services Bureau, Inc. (SHPS, Inc.) has leased 100% of
Blankenbaker Business Center 1A. The annual base rent, which excludes the cost
of utilities, is $7.48 per square foot. The lease term is for 11 years and
expires in July 2005. The lease provides for the tenant to contribute toward the
payment of common area expenses, insurance and real estate taxes. Sykes
HealthPlan Services Bureau, Inc. is a professional service-orientated
organization which deals in insurance claim processing. The occupancy level at
the business center as of December 31, 1999, 1998, 1997, 1996 and 1995 was 100%.
See Item 7 for average occupancy levels for the periods ending December 31,
1999, 1998, and 1997.
The following table contains approximate data concerning the lease in effect on
December 31, 1999:
Sq. Ft. and
% of Net Current
Year of Rentable Annual Rental
Name Expiration Area (1) Per Square Foot
---- ---------- ---- ---------------
Sykes HealthPlan
Services Bureau, Inc. 2005 100,640 (100%) $ 7.48
(1) Rentable area includes ground floor and mezzanine square feet.
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Blankenbaker Business Center 1A - Continued
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It has previously been reported that SHPS, Inc. intended to consolidate its
operations and build its corporate headquarters in Jefferson County, Kentucky.
SHPS, Inc. occupies 100% of Blankenbaker Business Center 1A. The Partnership
believes that SHPS, Inc. no longer intends to build a Corporate Headquarters. As
of December 31, 1999, it is the Partnership's understanding that SHPS, Inc.,
intends to occupy the space at Blankenbaker Business Center 1A through the
duration of the lease term, which expires in July 2005.
Lakeshore Business Center Phase I
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As of December 31, 1999, there were 29 tenants leasing space aggregating
approximately 76,069 square feet of rentable area at Lakeshore Business Center
Phase I. All leases provide for tenants to contribute toward the payment of
common area expenses, insurance, utilities and real estate taxes. The tenants
who occupy Lakeshore Business Center Phase I are professional service orientated
organizations. The principal occupations/professions practiced include
telemarketing services, financial services and computer integration services.
There are no tenants that lease 10% or more of Lakeshore Business Center Phase
I's rentable area. The occupancy levels at the business center as of December 31
were 73% (1999), 85% (1998), 96% (1997) and 92% (1996 and 1995). See Item 7 for
average occupancy levels for the periods ending December 31, 1999, 1998 and
1997.
Lakeshore Business Center Phase II
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As of December 31, 1999, there were 20 tenants leasing space aggregating
approximately 70,417 square feet of the rentable area at Lakeshore Business
Center Phase II. All leases provide for tenants to contribute toward the payment
of common area expenses, insurance, utilities and real estate taxes. The tenants
who occupy Lakeshore Business Center Phase II are professional service-oriented
organizations. The principal occupations/professions practiced include medical
equipment leasing, insurance services and management offices for the Florida
state lottery. One tenant individually leases more than 10% of Lakeshore
Business Center Phase II's rentable area. The occupancy levels at the business
center as of December 31 were 72% (1999), 79% (1998), 100% (1997), 89% (1996)
and 72% (1995). See Item 7 for average occupancy levels for the periods ending
December 31, 1999, 1998 and 1997.
The following table contains approximate data concerning the major lease in
effect on December 31, 1999:
Current
Year of Sq. Ft. and % of Annual Rental
Expiration Net Rentable Area Per Square Foot
---------- ----------------- ---------------
Major tenant (1):
1 2002 14,665 (15.1%) $15.30
(1) Major tenants are those that individually occupy 10 percent or more of
the rentable square footage.
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Description of Real Property
- ----------------------------
Additional operating data regarding the Partnership's properties is furnished in
the following table.
Federal Realty Annual
Tax Basis Tax Rate Realty Taxes
--------- -------- ------------
Property Owned in Joint Venture
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with NTS-Properties IV and NTS-
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Properties VII, Ltd.
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Blankenbaker Business Center 1A $ 7,356,545 $ .010710 $ 55,850
Properties Owned through
- ------------------------
Lakeshore/University II Joint
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Venture (L/U II Joint Venture)
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Lakeshore Business Center Phase I 10,273,821 .025496 162,680
Lakeshore Business Center
Phase II 12,263,794 .025496 174,122
Percentage ownership has not been applied to the information in the above table
for properties owned through a joint venture.
Depreciation for book purposes is computed using the straight-line method over
the estimated useful lives of the assets which are 5-30 years for land
improvements, 5-30 years for buildings and improvements, 5-30 years for
amenities and life of the lease for tenant improvements.
Investment in Joint Ventures
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Blankenbaker Business Center Joint Venture - On December 28, 1990, the
Partnership entered into a joint venture agreement with NTS-Properties VII, Ltd.
to own and operate Blankenbaker Business Center 1A and to acquire an
approximately 2.49 acre parking lot that was being leased by the business center
from an affiliate of the General Partner. The use of the parking lot is a
provision of the tenant's lease agreement with the business center. On August
16, 1994, the Blankenbaker Business Center Joint Venture agreement was amended
to admit NTS-Properties IV to the Joint Venture. The terms of the Joint Venture
shall continue until dissolved. Dissolution shall occur upon, but not before,
the first to occur of the following:
(a) the withdrawal, bankruptcy or dissolution of a Partner or the
execution by a Partner of an assignment for the benefit of its
creditors;
(b) the sale, condemnation or taking by eminent domain of all or
substantially all of the assets of the Real Property and Parking
Lot and the sale and/or collection of any evidences of
indebtedness received in connection therewith;
(c) the vote or consent of each of the Partners to dissolve the
Partnership; or
(d) December 31, 2030.
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Investment in Joint Ventures - Continued
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In 1990 when the Joint Venture was originally formed, NTS-Properties VII, Ltd.
contributed $450,000 for additional tenant improvements to the business center
and $325,000 for the purchase of the 2.49 acre parking lot. The additional
tenant improvements were made to the business center and the parking lot was
purchased in 1991. The Partnership contributed Blankenbaker Business Center 1A
together with improvements and personal property subject to mortgage
indebtedness of $4,715,000. During November 1994, this note payable was replaced
with permanent financing in the amount of $4,800,000. The mortgage bears
interest at a fixed rate of 8.5% and is due November 15, 2005. Currently monthly
principal payments are based upon an 11-year amortization schedule. At maturity,
the mortgage will have been repaid based on the current rate of amortization.
On April 28, 1994, the Joint Venture obtained $1,100,000 in debt financing to
fund a portion of the tenant finish and leasing costs which were associated with
the Prudential lease renewal and expansion. The $1,100,000 note bore interest at
the Prime Rate + 1 1/2%. In order for the Joint Venture to obtain the $4,800,000
of permanent financing discussed above, it was necessary for the Joint Venture
to seek an additional Joint Venture partner to provide the funds necessary for
the tenant finish and leasing costs instead of debt financing. See the following
paragraph for information regarding the new joint venture partner. The
$1,100,000 note was retired in August 1994. This resulted in the Joint Venture's
debt being at a level where permanent financing could be obtained and serviced.
On August 16, 1994, NTS-Properties VII, Ltd. contributed $500,000 and NTS-
Properties IV contributed $1,100,000 in accordance with the agreement to amend
the Joint Venture. The need for additional capital by the Joint Venture was a
result of the lease renewal and expansion which was signed April 28, 1994
between the Joint Venture and Prudential. The lease expanded Prudential's leased
space by approximately 15,000 square feet and extended its current lease term
through July 2005. Approximately 12,000 square feet of the expansion was into
new space which had to be constructed on the second level of the existing
business center. With this expansion, Prudential occupied 100% of the business
center. The Partnership was not in a position to contribute additional capital,
nor was NTS- Properties VII, Ltd. in a position to contribute all of the capital
required for the project. NTS-Properties IV was willing to participate in the
Joint Venture and to contribute, together with NTS-Properties VII, Ltd., the
capital necessary with respect to the project. The Partnership agreed to the
admission of NTS- Properties IV to the Joint Venture, and to the capital
contributions by NTS- Properties IV and NTS-Properties VII, Ltd. with the
knowledge that its joint venture interest would, as a result, decrease. See the
following paragraph for a discussion of how the revised interests in the Joint
Venture were calculated with the admission of NTS-Properties IV. No future
contributions are anticipated as of December 31, 1999.
In order to calculate the revised joint venture percentage interests, the assets
of the Joint Venture were revalued in connection with the admission of NTS-
Properties IV as a joint venture partner and the additional capital
contributions. The value of the Joint Venture's assets immediately prior to the
additional capital contributions was $6,764,322 and its outstanding debt was
$4,650,042, with net equity being $2,114,280. The difference between the value
of the Joint Venture's assets and the value at which they were carried on the
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Investment in Joint Ventures - Continued
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books of the Joint Venture was allocated to the Partnership and NTS-Properties
VII, Ltd. in determining each Joint Venture partner's percentage interest.
The Partnership's interest in the Joint Venture decreased from 69% to 39% as a
result of the capital contributions by NTS-Properties IV and NTS-Properties VII,
Ltd. The respective percentage interests of NTS-Properties IV and NTS-Properties
VII, Ltd. in the Joint Venture subsequent to these capital contributions are 30%
and 31%.
The Net Cash Flow for each calendar quarter is distributed to the Partners in
accordance with their respective Percentage Interests. The term Net Cash Flow
for any period shall mean the excess, if any, of (A) the sum of (i) the gross
receipts of the Joint Venture Property for such period, other than capital
contributions, plus (ii) any funds released by the Partners from previously
established reserves (referred to in clause (B)(iv) below), over (B) the sum of
(i) all cash operating expenses paid by the Joint Venture Property during such
period in the course of business, (ii) capital expenditures paid in cash during
such period, (iii) payments during such period on account of amortization of the
principal of any debts or liabilities of the Joint Venture Property and (iv)
reserves for contingent liabilities and future expenses of the Joint Venture
Property as established by the Partners; provided, however, that the amounts
referred to in (B)(i), (ii) and (iii) above shall only be taken into account to
the extent not funded by capital contributions or paid out of previously
established reserves. Percentage Interest means that percentage which the
capital contributions of a Partner bears to the aggregate capital contributions
of all the Partners.
Net income or net loss is allocated between the Partners in accordance with
their respective Percentage Interests. The Partnership's ownership share was 39%
at December 31, 1999.
Lakeshore/University II Joint Venture - On January 23, 1995, a new joint venture
known as the Lakeshore/University II Joint Venture (L/U II Joint Venture) was
formed among the Partnership and NTS-Properties IV, NTS-Properties V and
NTS/Fort Lauderdale, Ltd., affiliates of the General Partner of the Partnership,
for purposes of owning Lakeshore Business Center Phases I and II, University
Business Center Phase II (property sold during 1998 - see below for details
regarding the transaction) and certain undeveloped tracts of land adjacent to
the Lakeshore Business Center development.
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Investment in Joint Ventures - Continued
- ----------------------------------------
The table below identifies which properties were contributed to the L/U II Joint
Venture and the respective owners of such properties prior to the formation of
the joint venture.
Property Contributing Owner
-------- ------------------
Lakeshore Business Center Phase I NTS-Properties IV and NTS-
Properties V
Lakeshore Business Center Phase II NTS-Properties Plus Ltd.
Undeveloped land adjacent to the NTS-Properties Plus Ltd.
Lakeshore Business Center
development (3.8 acres)
Undeveloped land adjacent to the NTS/Fort Lauderdale, Ltd.
Lakeshore Business Center
development (2.4 acres)
University Business Center Phase II NTS-Properties V and NTS-
Properties Plus Ltd.
The term of the Joint Venture shall continue until dissolved. Dissolution shall
occur upon, but not before, the first to occur of the following:
(a) the withdrawal, bankruptcy or dissolution of a Partner or the
execution by a Partner of an assignment for the benefit of its
creditors;
(b) the sale, condemnation or taking by eminent domain of all or
substantially all of the Real Property and the sale and/or
collection of any evidences of indebtedness received in connection
therewith;
(c) the vote or consent of each of the Partners to dissolve the
Partnership;
or
(d) December 31, 2030.
Each of the properties was contributed to the L/U II Joint Venture subject to
existing indebtedness, except for Lakeshore Business Center Phase I which was
contributed to the joint venture free and clear of any mortgage liens, and all
such indebtedness was assumed by the joint venture. Mortgages were recorded on
University Business Center Phase II in the amount of $3,000,000, in favor of the
banks which held the indebtedness on University Business Center Phase II,
Lakeshore Business Center Phase II and the undeveloped tracts of land prior to
the formation of the joint venture and on Lakeshore Business Center Phase I in
the amount of $5,500,000 subsequent to the formation of the L/U II Joint
Venture. In addition to the above, NTS-Properties IV contributed $750,000 to the
L/U II Joint Venture. As a result of the valuation of the properties contributed
to the L/U II Joint Venture, the Partnership obtained a 12% partnership interest
in the joint venture.
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<PAGE>
Investment in Joint Ventures - Continued
- ----------------------------------------
The properties of the L/U II Joint Venture are encumbered by mortgages payable
to an insurance company as follows:
Loan Balance
at 12/31/99 Encumbered Property
----------- -------------------
$4,543,531 Lakeshore Business Center Phase I
$4,888,353 Lakeshore Business Center Phase II
The loans are recorded as liabilities of the Joint Venture. The Partnership's
proportionate interest in the loans at December 31, 1999 is $792,279 ($381,657
and $410,622). The mortgages bear interest at a fixed rate of 8.125% and are due
August 1, 2008. 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.
On October 6, 1998 pursuant to a contract executed on September 8, 1998, the
Lakeshore/University II Joint Venture ("L/U II") sold University Business Center
Phase II office building to Silver City Properties, Ltd. ("the Purchaser") for
$8,975,000. University Business Center Phase II was owned by the L/U II Joint
Venture of which the Partnership owned a 12% interest as of October 6, 1998.
Portions of the proceeds from this sale were immediately used to pay the
remainder of the outstanding debt of approximately $5,933,382 on University
Business Center Phase II (including interest and prepayment penalties). NTS-
Properties Plus, Ltd. reflected a gain of approximately $2,080,000 associated
with this sale in the fourth quarter of 1998. Net cash proceeds received by the
Partnership from the L/U II Joint Venture, as a result of a cash distribution of
the proceeds from the sale, were approximately $308,000. NTS-Properties Plus,
Ltd. used a portion of the cash distribution to make a $240,000 payment on the
$350,000 loan obtained in January 1998. A portion of the distribution was also
used to repay approximately $27,000 owed to NTS Development Company, an
affiliate of the General Partner for operating expenses.
On July 1, 1999, NTS-Properties V contributed $1,737,000 to the
Lakeshore/University II Joint Venture. The other partners in the Joint Venture,
including NTS-Properties Plus, did not make capital contributions at that time.
Accordingly, the ownership percentages of the other partners in the Joint
Venture decreased. Effective July 1, 1999, NTS-Properties Plus' percentage of
ownership in the Joint Venture is 8.40%, as compared to 12.57% prior to July 1,
1999.
On July 23, 1999, the L/U II Joint Venture sold 2.4 acres of land adjacent to
the Lakeshore Business Center for a purchase price of $528,405. The Partnership
reflects a gain of approximately $7,900 associated with this sale in the third
quarter 1999 and expects to use the net proceeds from the sale of the land to
help fund the construction of Lakeshore Business Center III. See above for
details of the Partnership's intention to build Lakeshore Business Center III.
The Net Cash Flow for each calendar quarter is distributed to the Partners in
accordance with their respective Percentage Interest. The term Net Cash Flow
means the excess, if any, of (A) the sum of (i) the gross receipts of the Joint
Venture Properties for such period (including loan proceeds), other than capital
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<PAGE>
Investment in Joint Ventures - Continued
- ----------------------------------------
contributions, plus (ii) any funds released from previously established reserves
(referred to in clause (B)(iv) below), over (B) the sum of (i) all cash
operating expenses paid by the Joint Venture during such period in the course of
business, (ii) capital expenditures paid in cash during such period, (iii)
payments during such period on account of amortization of the principal of any
debts or liabilities of the Joint Venture and (iv) reserves for contingent
liabilities and future expenses of the Joint Venture, as established by the
Partners; provided, however, that the amounts referred to in (B)(i), (ii) and
(iii) above shall only be taken into account to the extent not funded by capital
contributions or paid out of previously established reserves. Percentage
Interest means that percentage which the capital contributions of a Partner
bears to the aggregate capital contributions of all the Partners.
Net income or net loss is allocated between the partners in accordance with
their respective Percentage Interests. The Partnership's ownership share was
8.40% at December 31, 1999.
Competition
- -----------
The Partnership's properties are subject to competition from similar types of
properties (including, in certain areas, properties owned or managed by
affiliates of the General Partner) in the respective vicinities in which they
are located. Such competition is generally for the retention of existing tenants
or for new tenants when vacancies occur. The Partnership maintains the
suitability and competitiveness of its properties primarily on the basis of
effective rents and service provided to tenants. Competition is expected to
increase in the future as a result of the construction of additional properties.
As of December 31, 1999, there are no properties under construction in the
respective vicinities in which the properties are located. The Partnership has
not commissioned a formal market analysis of competitive conditions in any
market in which it owns properties, but relies upon the market condition
knowledge of the employees of NTS Development Company who manage and supervise
leasing for each property.
Management of Properties
- ------------------------
NTS Development Company, an affiliate of NTS-Properties Plus Associates, the
General Partner of the Partnership, directs the management of the Partnership's
properties pursuant to a written agreement. NTS Development Company is a wholly-
owned subsidiary of NTS Corporation. Mr. J. D. Nichols has a controlling
interest in NTS Corporation and is a General Partner of NTS-Properties Plus
Associates. Under the agreement, the Property Manager establishes rental
policies and rates and directs the marketing activity of leasing personnel. It
also coordinates the purchase of equipment and supplies, maintenance activity
and the selection of all vendors, suppliers and independent contractors. As
compensation for its services, the Property Manager received $38,234 for the
year ended December 31, 1999. The fee is equal to 6% of gross revenues from the
Partnership's properties.
-13-
<PAGE>
Management of Properties - Continued
- ------------------------------------
In addition, the management agreement requires the Partnership to purchase all
insurance relating to the managed properties, to pay the direct out-of-pocket
expenses of the Property Manager in connection with the operation of the
properties, including the cost of goods and materials used for and on behalf of
the Partnership, and to reimburse the Property Manager for the salaries,
commissions, fringe benefits, and related employment expenses of on-site
personnel.
The term of the Management Agreement between NTS Development Company and the
Partnership was for an initial term of five years, and thereafter for succeeding
one-year periods, unless cancelled. The Agreement is subject to cancellation by
either party upon sixty days written notice. As of December 31, 1999, the
Management Agreement is still in effect.
Working Capital Practices
- -------------------------
Information about the Partnership's working capital practices is included in
Management Discussion and Analysis of Financial Condition and Results of
Operations in Part II, Item 7.
Seasonal Operations
- -------------------
The Partnership does not consider its operations to be seasonal to any material
degree.
Conflict of Interest
- --------------------
Because the principals of the General Partner and/or its affiliates own and/or
operate real estate properties other than those owned by the Partnership that
are or could be in competition with the Partnership, potential conflicts of
interest exist. Because the Partnership was organized by and is operated by the
General Partner, these conflicts are not resolved through arm's length
negotiations but through the exercise of the General Partner's good judgment
consistent with its fiduciary responsibility to the Limited Partners and the
Partnership's investment objectives and policies. The General Partner is
accountable to the Limited Partners as a fiduciary and consequently must
exercise good faith and integrity in handling the Partnership's affairs. A
provision has been made in the Partnership Agreement that the General Partner
will not be liable to the Partnership except for acts or omissions performed or
omitted fraudulently, in bad faith or with negligence. In addition, the
Partnership Agreement provides for indemnification of the General Partner by the
Partnership for liability resulting from errors in judgment or certain acts or
omissions. The General Partner and its affiliates retain a free right to compete
with the Partnership's properties including the right to develop competing
properties now and in the future, in addition to those existing properties which
may compete directly or indirectly. NTS Development Company, the Property
Manager and an affiliate of the General Partner, acts in a similar capacity for
other affiliated entities in the same geographic region where the Partnership
has property interests. The agreement with the Property Manager is on terms no
less favorable to the Partnership than those which could be obtained from a
third party for similar services in the same geographical region in which the
properties are located. The contract is terminable by either party without
penalty upon 60 days written notice.
There are no other agreements or relationships between the Partnership, the
General Partner and its affiliates than those previously described.
-14-
<PAGE>
Employees
- ---------
The Partnership has no employees; however, employees of an affiliate of the
General Partner are available to perform services for the Partnership. The
Partnership reimburses this affiliate for the actual costs of providing such
services. (See Item 8 and 9 for further discussion of related party
transactions).
Governmental Contracts and Regulations
- --------------------------------------
No portion of the Partnership's business is subject to renegotiation of profits
or termination of contracts or sub-contracts at the election of the United
States Government.
Item 3. Legal Proceedings
-----------------
None.
Item 4. Submission of Matters to Vote of Security Holders
-------------------------------------------------
None.
-15-
<PAGE>
PART II
Item 5. Market for Registrant's Limited Partnership Interests and Related
-------------------------------------------------------------------
Partner Matters
---------------
There is no established trading market for the limited partnership interests,
nor is one likely to develop. The Partnership had 995 limited partners as of
February 29, 2000. Cash distributions and allocations of net income (loss) are
made as described in Note 1D to the Partnership's 1999 financial statements in
Item 8.
No distributions were paid during 1999, 1998 or 1997. Quarterly distributions
are determined based on current cash balances, cash flow being generated by
operations and cash reserves needed for future leasing costs, tenant finish
costs, and capital improvements.
Due to the fact that no distributions were made during 1999, 1998 or 1997, the
table which presents that portion of the distributions that represent a return
of capital on a Generally Accepted Accounting Principle basis has been omitted.
-16-
<PAGE>
Item 6. Selected Financial Data (4)
---------------------------
<TABLE>
For the years ended December 31, 1999, 1998, 1997, 1996 and 1995.
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Rental and other
income $ 648,854 $ 860,034 $ 827,978 $ 833,162 $ 955,654
Gain on sale of
property 7,925 2,083,049 -- -- --
Total expenses (670,842) (808,138) (905,412) (978,219) (1,341,884)
------------ ------------ ------------ ------------ ------------
Income (loss) before
extraordinary item (14,063) 2,134,945 (77,434) (145,057) (386,230)
Extraordinary item -- (108,430) -- -- --
------------ ------------ ------------ ------------ ------------
Net income (loss) $ (14,063) $ 2,026,515 $ (77,434) $ (145,057) $ (386,230)
============ ============ ============ ============ ============
Net income (loss) allocated to:
General Partner $ (141) $ 20,265 $ (774) $ (1,451) $ (3,862)
Limited partners $ (13,922) $ 2,006,250 $ (76,660) $ (143,606) $ (382,368)
Net income (loss)
per limited
partnership unit $ (0.02) $ 3.04 $ (0.12) $ (0.21) $ (0.56)
Weighted average
number of limited
partnership units 650,531 660,429 666,248 685,634 685,647
Cumulative net loss
allocated to:
General Partner $ (102,814) $ (102,673) $ (122,938) $ (122,164) $ (120,713)
Limited partners $(10,178,579) $(10,164,657) $(12,170,907) $(12,094,247) $(11,950,641)
Cumulative taxable loss allocated to:
General Partner $ (17,709) $ (17,861) $ (42,692) $ (42,315) $ (51,054)
Limited partners $ (3,879,335) $ (3,904,694) $ (6,283,963) $ (6,241,493) $ (6,244,619)
Cumulative
distributions
declared:
General Partner $ 20,592 $ 20,592 $ 20,592 $ 20,592 $ 20,592
Limited partners $ 2,038,520 $ 2,038,520 $ 2,038,520 $ 2,038,520 $ 2,038,520
At year end:
Land, buildings and
amenities $ 1,423,671 $ 2,040,099 (3) $ 1,092,998 $ 1,218,046 $ 1,351,777
Total assets $ 1,736,851 $ 2,296,893 $ 1,370,774 $ 1,571,288 $ 1,720,292
Mortgages and notes
payable $ 2,160,294 $ 2,739,066 $ 3,528,058 $ 3,770,347 $ 3,871,374
</TABLE>
The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this Form 10-K
report.
(1) See Item 8 Note 10 for details of the sale of 2.4 acres of land
adjacent to the Lakeshore Business Center in July 1999.
(2) See Item 8 Note 10 for details of the sale of University Business Center
Phase II to Silver City Properties, Ltd. on October 6, 1998.
(3) Increase of approximately $947,000 is primarily due to negative book basis
in University Business Center Phase II retired in the fourth quarter of 1998
as a result of the sale of the property to Silver City Properties, Ltd.
(4) See Item 8 Note 1B Partnership's Plans Relative to Continuing Operations.
-17-
<PAGE>
Item 7. 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 8 and the cautionary statements below.
The Partnership currently holds minority interests in three 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
interest further decline as a result of the contributions made by the
financially stronger majority interest affiliated partnership.
Prior to December 31, 1999, NTS Development Company agreed to defer amounts owed
to it by the Partnership. NTS Development Company, an affiliate of the General
Partner (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 Development Company did
not extend the commitment past January 1, 2000.
NTS Development Company 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.
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. The Partnership is evaluating alternatives and
expects to decide on a course of action during the second quarter of 2000.
Occupancy Levels
- ----------------
The occupancy levels at the Partnership properties as of December 31 were as
follows:
1999(1) 1998 1997
------- ---- ----
Property owned in Joint Venture with NTS-
- -----------------------------------------
Properties IV and NTS-Properties VII, Ltd.
- ------------------------------------------
(ownership % at December 31, 1999)
- ----------------------------------
Blankenbaker Business Center 1A (39%) 100% 100% 100%
Properties owned through Lakeshore/University
- ---------------------------------------------
II Joint Venture (L/U II Joint Venture)
- ---------------------------------------
Lakeshore Business Center Phase I(2)(3)(4) 73% 85% 96%
Lakeshore Business Center Phase II(2)(4) 72% 79% 100%
University Business Center Phase II (5) N/A N/A 99%
(Footnotes continued on next page)
-18-
<PAGE>
Occupancy Levels - Continued
- ----------------------------
(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
year ending occupancy is only a temporary fluctuation and does not
represent a permanent downward occupancy trend.
(3) As of December 31, 1999, one new five-year lease totaling 2,406 square
feet was signed at Lakeshore Business Center I. The tenant took occupancy
during the first quarter of 2000 and the business center's occupancy has
increased to 76%.
(4) Ownership percentage was 12% at December 31, 1997 and 1998 and 8% as of
December 31, 1999. See Item 8 Note 4C.
(5) On October 6, 1998, University Business Center Phase II was sold. See
below for details of this transaction. Ownership percentage as of
December 31, 1997 was 12%.
Average occupancy levels at the Partnership properties as of December 31 were as
follows:
1999 1998 1997
---- ---- ----
Property owned in Joint Venture with NTS-
- -----------------------------------------
Properties IV and NTS-Properties VII, Ltd.
- ------------------------------------------
(ownership % at December 31, 1999)
- ----------------------------------
Blankenbaker Business Center 1A (39%) 100% 100% 100%
Properties owned through Lakeshore/University
- ---------------------------------------------
II Joint Venture (L/U II Joint Venture)
- ---------------------------------------
Lakeshore Business Center Phase I (1)(2) 74% 88% 96%
Lakeshore Business Center Phase II (1)(2) 85% 91% 94%
University Business Center Phase II (3) N/A 91% (4) 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.
(2) Ownership percentage was 12% as of December 31,1997 and 1998 and 8% as of
December 31, 1999.
(3) On October 6, 1998, University Business Center Phase II was sold. See
below for details of this transaction.
(4) Represents average occupancy through October 6, 1998.
-19-
<PAGE>
Rental and Other Income
- -----------------------
The rental and other income generated by the Partnership's properties for the
years ended December 31, 1999, 1998 and 1997 were as follows:
1999 1998 1997
---- ---- ----
Property owned in Joint
- -----------------------
Venture with
- ------------
NTS-Properties IV and
- ---------------------
NTS-Properties VII, Ltd.
- ------------------------
(ownership % at December
- ------------------------
31, 1999)
- ---------
Blankenbaker Business
Center 1A (39%) $ 357,122 $ 364,750 $ 366,251
Properties owned through
- ------------------------
Lakeshore/University II
- -----------------------
Joint Venture (L/U II
- ---------------------
Joint Venture)
- --------------
Lakeshore Business Center
Phase I (1) $ 135,841 $ 187,827 $ 178,745
Lakeshore Business Center
Phase II (1) $ 148,486 $ 205,984 $ 177,396
University Business Center
Phase II N/A $ 98,039 (2)(3)$ 104,600 (3)
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
(1) Represents ownership percentage of 12% for the periods ending December
31, 1997 and 1998. Ownership percentage is 12% for the six months ended
June 30, 1999 and 8% for the six months ended December 31, 1999.
(2) On October 6, 1998, University Business Center Phase II was sold. See
below for the details of this transaction. Revenues shown here represent
1998 income through the date of disposition.
(3) Revenues for 1998 and 1997 are reported at 12% ownership.
The following is an analysis of material changes in results of operations for
the periods ending December 31, 1999, 1998 and 1997. Items that did not have a
material impact on operations for the periods listed above have been eliminated
from this discussion.
-20-
<PAGE>
Rental and Other Income - Continued
- -----------------------------------
Rental and other income decreased approximately $211,000 or 25% in 1999. The
decrease was primarily a 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 twelve
months ended December 31, 1998. The decrease is also due to decreases in average
occupancy at Lakeshore Business Center Phases I and II, and to a decrease in
ownership of the Lakeshore/University II Joint Venture, as a result of a capital
contribution made by NTS-Properties V to the Joint Venture on July 1, 1999, (see
Item 8 Note 4C to the Financial Statements).
Year ending occupancy percentages represent occupancy only on a specific date;
therefore, the above analysis considers average occupancy percentages which are
more representative of the entire year's results.
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 periods
ended December 31, 1999, 1998 or 1997.
The 1999 gain on sale of assets was a result of the sale of Tract 12 land by the
Lakeshore/University II Joint Venture. The gain totaled $94,347. NTS-Properties
Plus' share of the gain is approximately $7,900.
The 1998 gain on sale of assets was the result of selling University Business
Center Phase II. On October 6, 1998 pursuant to a contract executed on September
8, 1998, the Lakeshore/University II Joint Venture ("L/U II") sold University
Business Center Phase II office building to Silver City Properties, Ltd. ("the
Purchaser") for $8,975,000. University Business Center Phase II was owned by the
L/U II Joint Venture of which the Partnership owned a 12% interest as of the
date of the sale. Portions of the proceeds from this sale were immediately used
to pay outstanding debt of approximately $5,933,382 on University Business
Center Phase II (including interest and prepayment penalties). Net cash proceeds
received by the Partnership from the L/U II Joint Venture, as a result of a cash
distribution of the proceeds from the sale, were approximately $308,000. NTS
Properties Plus, Ltd. used a portion of the cash distribution to repay $240,000
of the $350,000 loan obtained by the Partnership in January 1998. A portion of
the distribution was also used to repay approximately $27,000 owed to NTS
Development Company, an affiliate of the General Partner for operating expenses
(See Note 9 Related Party Transactions).
Operating expenses decreased approximately $34,600 or 28% in 1999 due primarily
to decreased exterior building renovations at Blankenbaker Business Center 1A,
decreased repairs at Lakeshore Business Center II for parking lot sealing and
coating and due to the fact that University Business Center Phase II was sold
October 6, 1998. Also contributing to the decrease was a decrease in ownership
of the L/U II Joint Venture effective July 1, 1999.
-21-
<PAGE>
Rental and Other Income - Continued
- -----------------------------------
Operating expenses decreased approximately $23,000 or 16% in 1998 as a result of
decreased exterior building renovations at Blankenbaker Business Center 1A and
due to the sale of University Business Center Phase II on October 6, 1998.
Operating expenses - affiliated decreased approximately $7,400 or 12% in 1999
and increased approximately $5,700 or 10% in 1998. The 1999 decrease is
primarily due to the sale of University Business Center Phase II on October 6,
1998 and a decrease in ownership of the Lakeshore/University II Joint Venture
therefore reducing the Partnership's proportionate share of affiliated operating
expenses (See Item 8 Note 4C). The 1998 increase is a result of increased salary
costs. Operating expenses - affiliated are expenses for services performed by
employees of NTS Development Company, an affiliate of the General Partner of the
Partnership.
Interest expense decreased approximately $87,000 or 30% in 1999 and
approximately $10,000 or 3% in 1998 as a result of the reduction in debt from
the sale of University Business Center Phase II (see discussion above) and from
regular principal payments. The decrease is also due to continued principal
payments on the L/U II Joint Venture's and Blankenbaker Business Center 1A's
debt and a reduction in ownership of the L/U II Joint Venture as of July 1,
1999. The decrease is partially offset by interest incurred on the loan that the
Partnership obtained in January 1998, which bears interest at 8.5%. The balance
on the note payable was $165,000 and $110,000 at December 31, 1999 and 1998,
respectively.
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. Management fees decreased approximately $14,000 or
27% in 1999 primarily as a result of the sale of University Business Center II
in 1998 and a reduction in ownership of the L/U II Joint Venture effective July
1, 1999.
Real estate taxes decreased approximately $13,400 or 18% in 1999 primarily as a
result of the University Business Center Phase II sale on October 6, 1998 and a
reduction in ownership of the L/U II Joint Venture effective July 1, 1999.
Partially offsetting the decrease is an increase in expense at Lakeshore
Business Center Phase I resulting from a 1997 refund of overpayment of property
taxes received in 1998.
Real estate taxes decreased approximately $9,000 or 11% in 1998 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 (see
discussion above).
Professional and administrative expenses increased approximately $24,000 or 53%
in 1999 as a result of increased legal fees relating to the Tender Offers and
increased outside accounting fees. Partially offsetting the increase is the
decrease in ownership of the L/U II Joint Venture discussed above.
-22-
<PAGE>
Rental and Other Income - Continued
- -----------------------------------
Depreciation and amortization decreased approximately $51,000 or 32% in 1998.
The decrease is the result of a portion of the original assets at Blankenbaker
Business Center 1A becoming fully depreciated and the result of the sale of
University Business Center Phase II in October 1998 (see discussion above).
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets which are 5-30 years for land improvements, 5-30
years for buildings and improvements, 5-30 years for amenities and the life of
the lease for tenant improvements. The aggregate cost of the Partnership's
properties for Federal tax purposes is approximately $4,868,000.
The 1998 extraordinary item - early extinguishment of debt relates to the sale
of University Business Phase II (see discussion above). A portion of the
proceeds from the sale was used to retire the $5,128,872 mortgage payable prior
to its maturity (August 2008). As a result of the prepayment, a $763,995
penalty, of which the Partnership's proportionate share was $96,034, was
required by the insurance company who held the mortgage. Unamortized loan costs
connected with this loan were also expensed due to the fact that the mortgage
was repaid prior to its maturity.
Consolidated Cash Flows and Financial Condition
- -----------------------------------------------
The majority of the Partnership's cash flow in 1999 and 1997 was derived from
operating activities. The majority of the Partnership's cash flow in 1998 was
derived from investing activities primarily as a result of proceeds received
from the sale of University Business Center Phase II (see discussion above for
details of this transaction). 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 loan costs, 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 , 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.
-23-
<PAGE>
Consolidated Cash Flows and Financial Condition - Continued
- -----------------------------------------------------------
Cash flows provided by (used in):
1999 1998 1997
---- ---- ----
Operating activities $ 208,453 $ (131,422) $ 282,404
Investing activities 86,941 1,035,142 (30,868)
Financing activities (185,230) (890,026) (254,540)
----------- ----------- -----------
Net increase (decrease)
in cash and equivalents $ 110,164 $ 13,694 $ (3,004)
=========== =========== ===========
Net cash provided by operating activities increased approximately $340,000 in
1999. This increase was primarily driven by changes in the level of accounts
payable due to cash flow constraints of the Partnership.
Net cash provided by operating activities decreased approximately $413,000 in
1998. This decrease was driven by decreased accounts payable due to additional
borrowings under the Partnership's credit agreement.
Net cash provided by investing activities decreased approximately $948,000 in
1999 as compared to 1998. The decrease is primarily a result of the 1998 balance
including the Partnership's proportionate share of the proceeds received from
the sale of University Business Center Phase II in October 1998. The decrease is
partially offset by the positive net effect on cash flow in 1999 of the change
in the Partnership's ownership percentage of the Lakeshore/University II Joint
Venture as described in Note 4C to the Financial Statements.
Net cash provided by investing activities increased approximately $1,066,000 in
1998 as compared to 1997. The increase is primarily a result of the
Partnership's proportionate share of proceeds received from the sale of
University Business Center Phase II in the fourth quarter of 1998.
The decrease of approximately $705,000 of net cash used in financing activities
in 1999 is primarily driven by a reduction in net payments on mortgages. The
increase of approximately $635,000 in net cash used in financing activities in
1998 was the result of increased net payments on mortgages and payment of the
prepayment penalty on University Business Center II debt.
The Partnership has not made any cash distributions since the quarter ended June
30, 1991. Cash reserves (which are unrestricted cash and equivalents as shown on
the Partnership's balance sheet as of December 31) were $163,798, $53,634 and
$39,940 at December 31, 1999, 1998 and 1997, respectively. See Item 8 Note 1B to
the Financial Statements of this Form 10-K for a discussion of the Partnership's
plans relative to continuing operations.
Due to the fact that no distributions were made during 1999, 1998 or 1997, 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.
-24-
<PAGE>
Consolidated Cash Flows and Financial Condition - Continued
- -----------------------------------------------------------
Currently, the Partnership's plans for renovations and other major capital
expenditures include tenant improvements at the Partnership's properties as
required by lease negotiations. Changes to current tenant finish improvements
are a typical part of any lease negotiation. Improvements generally include a
revision to the current floor plan to accommodate a tenant's needs, new
carpeting and paint and/or 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, cash
reserves or additional financing where necessary.
As of December 31, 1999, the L/U II Joint Venture has a commitment, pursuant to
a contract signed December 6, 1999, to construct a building to be known as
Lakeshore Business Center Phase III on the 3.8 acres of land it owns at the
Lakeshore Business Center Development. Site work began in December 1999 and
shell construction began first quarter 2000. Construction costs are currently
estimated to be $4,000,000 and will be funded by a $1,737,000 capital
contribution from NTS-Properties V and approximately $2,680,000 debt financing
obtained subsequent to December 31, 1999. Construction is expected to be
completed by the fourth quarter of 2000. See Item 8 Note 4C for details of the
capital contribution made by NTS-Properties V and Note 13 for details of debt
financing obtained by the Partnership subsequent to December 31, 1999.
The Partnership has no other material commitments for renovations or capital
improvements as of December 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, 1999, 1998 and 1997, the
Partnership funded $14,757, $5,000 and $12,251, 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 December 31, 1999, the
Partnership has repurchased 42,002 Units for $35,329 at a price ranging from
$0.70 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. 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. The balance in the reserve at December 31, 1999 was $0.
On July 23, 1999, the L/U II 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.
The Partnership has an 8.40% interest in the Joint Venture. The Partnership
reflects a gain of approximately $7,900 associated with this sale in the third
quarter of 1999 and expects to use the net proceeds from the sale of the land to
help fund the construction of Lakeshore Business Center III as described below.
-25-
<PAGE>
Consolidated Cash Flows and Financial Condition - Continued
- -----------------------------------------------------------
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.
Leases at the Partnership's properties provide for tenants to contribute toward
the payment of 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.
Year 2000
- ---------
During 1999, all divisions of NTS Corporation, including NTS-Properties Plus,
the General Partner of the Partnership, reviewed the effort necessary to prepare
NTS' information systems (IT) and non-information technology with embedded
technology (ET) for the Year 2000. The information technology solutions were
addressed separately for the Year 2000 since the Partnership saw the need to
move to more advance management and accounting systems made available by new
technology and software development during the decade of the 1990's. NTS'
property management staff surveyed vendors to evaluate embedded technology in
our alarm systems, HVAC controls, telephone systems and other computer
associated facilities. Some equipment was replaced, while others had circuitry
upgrades.
In 1999, the PILOT software system, purchased in the early 1990's, was replaced
by a windows based network system both for NTS' headquarter functions and other
locations. The real estate accounting system developed, sold, and supported by
the Yardi Company of Santa Barbara, California was selected to replace PILOT.
The Yardi system is fully implemented and operational as of December 31, 1999.
There have been no Year 2000 related problems with this system.
The cost of these advances in our systems technology is not all attributable to
the Year 2000 issue since NTS had already identified the need to move to a
network based system regardless of the Year 2000. The Partnership's share of the
of the costs involved were approximately $5,000 in 1999 and 1998. These costs
primarily include the purchase, lease and maintenance of hardware and software.
At the date of this filing the Partnership did not experience any significant
operating issues relative to the Year 2000 issue. Despite diligent preparation,
unanticipated third-party failures, inability of our tenants to pay rent when
due, more general public infrastructure failures or failure of our remediation
efforts as planned could have a material adverse impact on our results of
operations, financial conditions and/or cash flows in 2000 and beyond.
-26-
<PAGE>
Cautionary Statements
- ---------------------
The Partnership currently holds minority interests in three 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
interest further decline as a result of the contributions made by the
financially stronger majority interest affiliated partnership.
Prior to December 31, 1999, NTS Development Company agreed to defer amounts owed
to it by the Partnership. NTS Development Company, an affiliated of the General
Partner (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 Development Company did
not extend the commitment past January 1, 2000.
NTS Development Company 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.
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. The Partnership is evaluating alternatives and
expects to decide on a course of action during the second quarter of 2000.
Some of the statements included in Items 1 and 2, Business and Properties, and
Item 7, 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 Management's Discussion and Analysis
of Financial Condition and Results of Operations, or elsewhere in this report,
which reflects management'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.
-27-
<PAGE>
Item 7A. 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. At December 31, 1999, a hypothetical 100 basis point increase in
interest rates would result in an approximately $61,000 decrease in the fair
value of debt.
-28-
<PAGE>
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To NTS-Properties Plus Ltd., a Florida Limited Partnership:
We have audited the accompanying balance sheets of NTS-Properties Plus Ltd. (a
Florida limited partnership) as of December 31, 1999 and 1998, and the related
statements of operations, partners' equity, and cash flows for each of the three
years in the period ended December 31, 1999. These financial statements and the
schedules referred to below are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NTS-Properties Plus Ltd. as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that NTS-
Properties Plus, Ltd. will continue as a going concern. As discussed in Note 1B
to the financial statements, NTS-Properties Plus, Ltd. has suffered recurring
losses from operations and has a net capital deficiency that raises substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1B. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules included on pages 48
through 50 are presented for purposes of complying with the Securities and
Exchange Commission's rules and regulations and are not a required part of the
basic financial statements. These schedules have been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to be
set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Louisville, Kentucky
March 24, 2000
-29-
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
------------------------
BALANCE SHEETS
--------------
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------
<CAPTION>
1999 1998
---- ----
ASSETS
- ------
<S> <C> <C>
Cash and equivalents $ 163,798 $ 53,634
Cash and equivalents - restricted 18,719 24,258
Accounts receivable 3,763 14,857
Land, buildings and amenities, net 1,423,671 2,040,099
Deferred leasing commissions 88,665 105,802
Other assets 38,235 58,243
----------- -----------
$ 1,736,851 $ 2,296,893
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (deficit)
- ------------------------------------------
Mortgages and note payable $ 2,160,294 $ 2,739,066
Accounts payable 134,091 74,664
Security deposits 13,091 15,231
Other liabilities 25,669 35,406
----------- -----------
2,333,145 2,864,367
Commitments and contingencies (Note 11)
Partners' equity (deficit) (596,294) (567,474)
----------- -----------
$ 1,736,851 $ 2,296,893
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
-30-
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
------------------------
STATEMENTS OF OPERATIONS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
----------------------------------------------------
<CAPTION>
1999 1998 1997
---- ---- ----
Revenues:
- ---------
<S> <C> <C> <C>
Rental income $ 639,747 $ 854,180 $ 826,343
Gain on Sale of Assets 7,925 2,083,049 --
Interest and other income 9,107 5,854 1,635
----------- ----------- -----------
656,779 2,943,083 827,978
Expenses:
- ---------
Operating expenses 89,925 124,500 147,540
Operating expenses - affiliated 55,503 62,881 57,172
Interest expense 206,672 293,936 303,763
Management fees 38,234 52,271 52,430
Real estate taxes 60,160 73,515 82,504
Professional and administrative
expenses 69,162 45,201 49,139
Professional and administrative
expenses - affiliated 45,098 46,041 51,513
Depreciation and amortization 106,088 109,793 161,351
----------- ----------- -----------
670,842 808,138 905,412
----------- ----------- -----------
Income (loss) before
extraordinary item (14,063) 2,134,945 (77,434)
Extraordinary item - early
extinguishment of debt -- (108,430) --
----------- ----------- -----------
Net income (loss) $ (14,063) $ 2,026,515 $ (77,434)
=========== =========== ===========
Net income (loss) allocated
to the limited partners:
Income (loss) before $ (13,922) $ 2,113,596 $ (76,660)
extraordinary item
Extraordinary item -- (107,346) --
----------- ----------- -----------
Net income (loss) $ (13,922) $ 2,006,250 $ (76,660)
=========== =========== ===========
Net income (loss) per
limited partnership Unit:
Income (loss) before $ (0.02) $ 3.20 $ (0.12)
extraordinary item
Extraordinary item -- (.16) --
----------- ----------- -----------
Net income (loss) $ (0.02) $ 3.04 $ (0.12)
=========== =========== ===========
Weighted average number of
limited partnership Units 650,531 660,429 666,248
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
-31-
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
------------------------
STATEMENTS OF PARTNERS' EQUITY DEFICIT(1)
-----------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
----------------------------------------------------
<CAPTION>
Limited General
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Balances at December 31, 1996 $(2,356,648) $ (142,656) $(2,499,304)
Net loss (76,660) (774) (77,434)
Repurchase of limited
Partnership Units (12,251) -- (12,251)
----------- ----------- -----------
Balances at December 31, 1997 (2,445,559) (143,430) (2,588,989)
Net income 2,006,250 20,265 2,026,515
Repurchase of limited
Partnership Units (5,000) -- (5,000)
----------- ----------- -----------
Balances at December 31, 1998 (444,309) (123,165) (567,474)
Net loss (13,922) (141) (14,063)
Repurchase of limited
Partnership Units (14,757) -- (14,757)
----------- ----------- -----------
Balances at December 31, 1999 $ (472,988) $ (123,306) $ (596,294)
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
(1) For the periods presented there are no elements of other comprehensive
income as defined by the Financial Accounting Standards Board,Statement
of Financial Accounting Standards,Standards Statement NO. 130,Reporting
---------
Comprehensive Income.
---------------------
-32-
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
------------------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
----------------------------------------------------
<CAPTION>
1999 1998 1997
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $ (14,063) $ 2,026,515 $ (77,434)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Gain on sale of assets (1) (7,925) (2,083,049) --
Extraordinary item - early extinguishment
of debt -- 108,430 --
Depreciation and amortization 106,088 109,793 161,351
Changes in assets and liabilities:
Cash and equivalents - restricted 5,539 (5,030) 5,312
Accounts receivable 11,094 (3,326) 38,877
Deferred leasing commissions 17,137 24,144 23,434
Other assets 43,035 (2,493) (4,702)
Accounts payable 59,427 (316,109) 122,086
Security deposits (2,140) 1,695 1,506
Other liabilities (9,739) 8,008 11,974
----------- ----------- -----------
Net cash (used in) provided by operating
activities 208,453 (131,422) 282,404
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of building before payment
of debt -- 1,054,473 --
Proceeds from the sale of land 39,248 -- --
Additions to land, building and amenities (59,449) (29,800) (30,868)
Other -- 10,469 --
Change in ownership of Joint Venture 107,142 -- --
----------- ----------- -----------
Net cash provided by (used in) investing
activities 86,941 1,035,142 (30,868)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in mortgages and note payable 55,000 350,000 --
Principal payments on mortgages and notes
payable (225,473) (1,138,992) (242,289)
Early principal payment penalty -- (96,034) --
Repurchase of limited partnership Units (14,757) (5,000) (12,251)
----------- ----------- -----------
Net cash used in financing activities (185,230) (890,026) (254,540)
----------- ----------- -----------
Net increase (decrease) in cash and
equivalents 110,164 13,694 (3,004)
CASH AND EQUIVALENTS, beginning of year 53,634 39,940 42,944
----------- ----------- -----------
CASH AND EQUIVALENTS, end of year $ 163,798 $ 53,634 $ 39,940
=========== =========== ===========
Interest paid on a cash basis $ 194,729 $ 299,685 $ 304,930
=========== =========== ===========
</TABLE>
(1) 1999 gain is the result of the sale of Tract 12 land and 1998 gain is
the result of the sale of University Business Center Phase II to Silver
City Properties, Ltd. (See Item 8 Note 10 for details of these
transactions).
The accompanying notes to financial statements are an integral part of these
statements.
-33-
<PAGE>
NTS-PROPERTIES PLUS LTD.
------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
----------------------------------------------------
1. Significant Accounting Policies
-------------------------------
A) Organization
------------
NTS-Properties Plus Ltd. (the "Partnership") is a limited partnership
organized under the laws of the State of Florida on April 30, 1987.
The General Partner is NTS-Properties Plus Associates (a Kentucky
limited partnership). The Partnership is in the business of
developing, constructing, owning and operating commercial real
estate.
B) Partnership's Plans Relative to Continuing Operations
-----------------------------------------------------
The Partnership currently holds minority interests in three
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
interest further decline as a result of the contributions made by the
financially stronger majority interest affiliated partnership.
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 Development Company did not extend the commitment past
January 1, 2000.
NTS Development Company 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.
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. The Partnership is
evaluating alternatives and expects to decide on a course of action
during the second quarter of 2000.
C) Properties
----------
The Partnership owns and operates the following properties:
- A 39% joint venture interest in Blankenbaker Business Center 1A,
a business center with approximately 50,000 net rentable ground
floor square feet and approximately 50,000 net rentable
mezzanine square feet located in Louisville, Kentucky.
- An 8% joint venture interest in the Lakeshore/University II
Joint Venture. A description of the properties owned by the
Joint Venture appears below:
- Lakeshore Business Center Phase I - a business center with
-----------------------------------
approximately 103,000 net rentable square feet located in
Fort Lauderdale, Florida.
- Lakeshore Business Center Phase II - a business center with
-----------------------------------
approximately 97,000 net rentable square feet located in
Fort Lauderdale, Florida.
- Outparcel Building Site - approximately 3.8 acres of land
------------------------
adjacent to the Lakeshore Business Center development, upon
which construction of Lakeshore Business Center Phase III
has commenced.
-34-
<PAGE>
1. Significant Accounting Policies - Continued
-------------------------------------------
D) Allocation of Net Income (Loss) and Cash Distributions
------------------------------------------------------
Pre-Termination Date Net Cash Receipts and Interim Net Cash Receipts,
as defined in the partnership agreement and which are made available
for distribution, will be distributed 99% to the limited partners and
1% to the General Partner.
Net operating income shall be allocated to the limited partners and
the General Partner in proportion to their respective cash
distributions. Net operating income in excess of cash distributions
shall be allocated as follows: (1) pro rata to all partners with a
negative capital account in an amount to restore the negative capital
account to zero; (2) 99% to the limited partners and 1% to the
General Partner until the limited partners have received cash
distributions from all sources equal to their original capital; (3)
the balance, 90% to the limited partners and 10% to the General
Partner. Net operating losses shall be allocated 99% to the limited
partners and 1% to the General Partner for all periods presented in
the accompanying Financial Statements.
E) Tax Status
----------
The Partnership has received a ruling from the Internal Revenue
Service stating that the Partnership is classified as a limited
partnership for federal income tax purposes. As such, the Partnership
makes no provision for income taxes. The taxable income or loss is
passed through to the holders of the partnership interests for
inclusion on their individual income tax returns.
A reconciliation of net income (loss) for financial statement
purposes versus that for income tax reporting is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net income (loss) $ (14,063) $ 2,026,515 $ (77,434)
Items handled
differently for tax
purposes:
Gain on sale of assets -- 96,109 --
Write-off of
unamortized tenant
finish improvements (3,682) (3,301) (4,606)
Allowance for doubtful
accounts (42) (75) (251)
Depreciation and
amortization 39,453 277,648 (16,778)
Capitalized leasing
costs 370 1,088 1,284
Rental income 3,168 6,116 54,937
Other 307 -- --
----------- ----------- -----------
Taxable income (loss) $ 25,511 $ 2,404,100 $ (42,848)
=========== =========== ===========
</TABLE>
F) 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.
-35-
<PAGE>
1. Significant Accounting Policies - Continued
-------------------------------------------
G) Joint Venture Accounting
------------------------
The Partnership has adopted the proportionate consolidation method of
accounting for joint venture properties. The Partnership's
proportionate interest in the venture's assets, liabilities,
revenues, expenses and cash flows are combined on a line-by-line
basis with the Partnership's own assets, liabilities, revenues,
expenses and cash flows. All intercompany accounts and transactions
have been eliminated in consolidation.
Proportionate consolidation is utilized by the Partnership due to the
fact that the ownership of joint venture properties, in substance, is
not subject to joint control. The managing General Partners of the
sole General Partner of the NTS sponsored partnerships which have
formed joint ventures are substantially the same. As such, decisions
regarding financing, development, sale or operations do not require
the approval of different partners. Additionally, the joint venture
properties are in the same business/industry as their respective
joint venture partners and their asset, liability, revenue and
expense accounts correspond with the accounts of such partners. It is
the belief of the General Partner of the Partnership that the
financial statement disclosures resulting from proportionate
consolidation provides the most meaningful presentation of assets,
liabilities, revenues, expenses and cash flows for the years
presented given the commonality of the Partnership's operations.
H) Cash and Equivalents - Restricted
---------------------------------
Cash and equivalents - restricted represents funds escrowed with
mortgage companies for property taxes in accordance with the loan
agreements with such mortgage companies.
I) Basis of Property and Depreciation
----------------------------------
Land, buildings and amenities are stated at cost to the Partnership.
Costs directly associated with the acquisition, development and
construction of a project are capitalized. Depreciation is computed
using the straight-line method over the estimated useful lives of the
assets which are 5-30 years for land improvements, 5-30 years for
building and improvements, 5-30 years for amenities and the life of
the lease for tenant improvements.
Statement of Financial Accounting Standards (SAS) 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 value. Application of this standard by management during the
years ended December 31, 1999, 1998 and 1997, did not result in an
impairment loss.
J) Rental Income and Deferred Leasing Commissions
----------------------------------------------
Certain of the Partnership's lease agreements are structured to
include scheduled and specified rent increases over the lease term.
For financial reporting purposes, the income from these leases is
being recognized on a straight-line basis over the lease term.
Accrued income connected with these leases is included in accounts
receivable and totaled $1,594 and $6,133 as of December 31, 1999 and
1998, respectively. All commissions paid to leasing agents are
deferred and amortized on a straight-line basis over the term of the
lease to which they apply.
K) Advertising
-----------
The Partnership expenses advertising-type costs as incurred.
Advertising expense was immaterial to the Partnership during the
years ended December 31, 1999, 1998 and 1997.
-36-
<PAGE>
1. Significant Accounting Policies - Continued
-------------------------------------------
L) Statements of Cash Flows
------------------------
For purposes of reporting cash flows, cash and equivalents include
cash on hand and short-term, highly liquid investments with initial
maturities of three months or less.
M) Reclassification of 1998 and 1997 Financial Statements
------------------------------------------------------
Certain reclassifications have been made to the December 31, 1998 and
1997 financial statements to conform with December 31, 1999
classifications. These classifications had no material effect on
previously reported operations.
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. 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, 1999,
1998 and 1997, the Partnership funded $14,757, $5,000 and $12,251,
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 December 31, 1999, the
Partnership has repurchased 42,002 Units for $35,329 at a price ranging
from $0.70 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.
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. The balance in the
reserve at December 31, 1999 was $0.
4. Investment in Joint Ventures
----------------------------
A) NTS University Boulevard Joint Venture
--------------------------------------
In January 1989, the Partnership entered into a joint venture
agreement with NTS-Properties V, a Maryland limited partnership, an
affiliate of the General Partner of the Partnership, to develop
University Business Center Phase II, an approximately 88,000 square
foot business center (including approximately 10,000 square feet of
mezzanine space), in Orlando, Florida. NTS-Properties V contributed
land valued at $1,460,000 and the Partnership contributed development
and carrying costs of approximately $8,000,000. During the second
quarter of 1994, NTS- Properties V made an approximately $79,000
capital contribution to the Joint Venture. The capital contribution
increased NTS-Properties V's ownership interest percentage from 16%
to 17% and reduced the Partnership's ownership percentage from 84% to
83%. The contribution was made to fund a portion of the Joint
Venture's operating costs. The net income or net loss is allocated
each calendar quarter based upon the respective partnership's
contribution. The Partnership's ownership share of University
Business Center Phase II was 83% on January 23, 1995 prior to its
contribution to the Lakeshore/University II Joint Venture.
On January 23, 1995, the partners of the NTS University Boulevard
Joint Venture contributed University Business Center Phase II to the
newly formed Lakeshore/University II (L/U II) Joint Venture. For a
further discussion of the L/U II Joint Venture, see Note C.
-37-
<PAGE>
4. Investment in Joint Ventures - Continued
----------------------------------------
B) Blankenbaker Business Center Joint Venture
------------------------------------------
On December 28, 1990 the Partnership entered into a Joint Venture
agreement with NTS-Properties VII, Ltd., an affiliate of the General
Partner of the Partnership, to complete the development of
Blankenbaker Business Center 1A. The Partnership contributed
Blankenbaker Business Center 1A together with improvements and
personal property (Real Property) to the capital of the Joint
Venture, subject to mortgage indebtedness in the amount of
$4,715,000. The agreed upon net fair market value of the
Partnership's capital contribution is $1,700,000, being the appraised
value of the Real Property ($6,415,000) reduced by the $4,715,000
mortgage. NTS-Properties VII, Ltd. contributed $450,000 which was
used for additional tenant improvements to the Real Property and made
a capital contribution to the Joint Venture of $325,000 to purchase a
2.49 acre parking lot that was being leased from an affiliate of the
General Partner as described in NTS-Properties Plus Ltd.'s
Prospectus. NTS-Properties Plus Ltd. transferred to the Joint Venture
its option to purchase the parking lot, and the Joint Venture
exercised its option. The use of the parking lot is a provision of
the tenant's lease agreement with the business center. By purchasing
the parking lot, the Joint Venture's annual operating expenses were
reduced approximately $35,000. The purchase price of the parking lot
was determined by an independent appraisal.
On August 16, 1994, the Blankenbaker Business Center Joint Venture
amended its joint venture agreement to admit NTS-Properties IV (an
affiliate of the General Partner of the Partnership) to the Joint
Venture. In accordance with the Joint Venture Agreement,
NTS-Properties IV contributed $1,100,000 and NTS-Properties VII, Ltd.
contributed $500,000. Additional capital was needed by the
Blankenbaker Business Center Joint Venture to fund the tenant finish
and leasing costs connected with the project discussed in the
following paragraph. However, the Partnership was not in a position
to contribute additional capital, nor was NTS-Properties VII, Ltd. in
a position to contribute all of the capital required for the project.
NTS-Properties IV was willing to participate in the Joint Venture and
to contribute, together with NTS- Properties VII, Ltd. the capital
necessary with respect to the project. The General Partner of the
Partnership agreed to the admission of NTS- Properties IV to the
Joint Venture, and to the capital contributions by NTS-Properties IV
and NTS-Properties VII, Ltd. with the knowledge that the
Partnership's joint venture interest would, as a result, decrease.
The need for additional capital by the Joint Venture was a result of
the lease renewal and expansion which was signed April 28, 1994
between the Joint Venture and Prudential Service Bureau, Inc.
("Prudential"). The lease expanded Prudential's leased space by
approximately 15,000 square feet and extended its current lease term
through July 2005. Approximately 12,000 square feet of the expansion
was into new space which had to be constructed on the second level of
the existing business center. With this expansion, Prudential
occupied 100% of the business center (approximately 101,000 square
feet). The tenant finish and leasing costs connected with the lease
renewal and expansion were approximately $1,400,000.
In order to calculate the revised joint venture percentage interests,
the assets of the Joint Venture were revalued in connection with the
admission of NTS-Properties IV as a joint venture partner and the
additional capital contributions. The value of the Joint Venture's
assets immediately prior to the additional capital contributions was
$6,764,322 and its outstanding debt was $4,650,042, with net equity
being $2,114,280. The difference between the value of the Joint
Venture's assets and the value at which they were carried on the
books of the Joint Venture has been allocated to the Partnership and
NTS-Properties VII, Ltd. in determining each Joint Venture partner's
percentage interest. The Partnership's interest in the Joint Venture
decreased from 69% to 39% as a result of the capital contributions by
NTS-Properties IV and NTS- Properties VII, Ltd. The respective
percentage interests of NTS- Properties IV and NTS-Properties VII,
Ltd. in the Joint Venture subsequent to these capital contributions
are 30% and 31%.
-38-
<PAGE>
4. Investment in Joint Ventures - Continued
----------------------------------------
B) Blankenbaker Business Center Joint Venture - Continued
------------------------------------------------------
Net income or loss is allocated each calendar quarter based on the
respective partnership's contribution. The Partnership's ownership
share was 39% at December 31, 1999. The Partnership's share of the
Joint Venture's revenues were $357,122 (1999), $364,750 (1998)and
$366,252 (1997). The Partnership's share of the joint venture's
expenses were $393,486 (1999), $409,532 (1998) and $434,588 (1997).
C) Lakeshore/University II Joint Venture
-------------------------------------
On January 23, 1995, a new joint venture known as the
Lakeshore/University II Joint Venture (L/U II Joint Venture) was
formed among the Partnership and NTS-Properties IV, NTS-Properties V
and NTS/Fort Lauderdale, Ltd., affiliates of the General Partner of
the Partnership, for purposes of owning Lakeshore Business Center
Phases I and II, University Business Center Phase II (sold October
1998 - see Note 10) and certain undeveloped tracts of land adjacent
to the Lakeshore Business Center development. The table below
identifies which properties were contributed to the L/U II Joint
Venture and the respective owners of such properties prior to the
formation of the joint venture.
Property (Net Asset Contributed) Contributing Owner
-------------------------------- ------------------
Lakeshore Business Center NTS-Properties IV and NTS-
Phase I ($6,249,667) Properties V
Lakeshore Business Center NTS-Properties Plus Ltd.
Phase II (-$1,023,535)
Undeveloped land adjacent to the NTS-Properties Plus Ltd.
Lakeshore Business Center
development (3.8 acres)(-$670,709)
Undeveloped land adjacent to the NTS/Fort Lauderdale, Ltd.
Lakeshore Business Center
development (2.4 acres) ($27,104)
University Business Center NTS-Properties V and NTS-
Phase II ($953,236) Properties Plus Ltd.
Each of the properties were contributed to the L/U II Joint Venture
subject to existing indebtedness, except for Lakeshore Business
Center Phase I which was contributed to the joint venture free and
clear of any mortgage liens, and all such indebtedness was assumed by
the L/U II Joint Venture. Mortgages were recorded on University
Business Center Phase II in the amount of $3,000,000, in favor of the
banks which held the indebtedness on University Business Center Phase
II, Lakeshore Business Center Phase II and the undeveloped tracts of
land prior to the formation of the joint venture and on Lakeshore
Business Center Phase I in the amount of $5,500,000 subsequent to the
formation of the L/U II Joint Venture. In addition to the above,
NTS-Properties IV also contributed $750,000 to the L/U II Joint
Venture. The Partnership's ownership share was 8% at December 31,
1999.
On July 1, 1999, NTS-Properties V contributed $1,737,000 to the
Lakeshore/University II Joint Venture (L/U II Joint Venture). The
other partners in the Joint Venture, including NTS-Properties Plus,
did not make capital contributions at that time. Accordingly, the
ownership percentages of the other partners in the Joint Venture
decreased. Effective July 1, 1999, NTS-Properties Plus' percentage
ownership in the Joint Venture is 8.40%, as compared to 12.57% prior
to July 1, 1999. The Partnership's share of the joint ventures
revenues was $297,619 (1999), $639,474 (1998) and $461,180 (1997).
The Partnership's share of the joint venture's expenses was $302,031
(1999), $584,635 (1998) and $556,747 (1997). See Note 10 below for
discussion of the University II sale.
-39-
<PAGE>
5. Land, Buildings and Amenities
-----------------------------
The following schedule provides an analysis of the Partnership's
investment in property held for lease as of December 31:
1999 1998
---- ----
Land and improvements $ 1,303,167 $ 1,669,552
Buildings, improvements and
amenities 2,131,942 2,720,967
----------- -----------
3,435,109 4,390,519
Less accumulated depreciation 2,011,438 2,350,420
----------- -----------
$ 1,423,671 $ 2,040,099
=========== ===========
6. Asset Held for Development
--------------------------
As of December 31, 1999, the L/U II Joint Venture intends to use the 3.8
acres of the land it owns at the Lakeshore Business Center development to
construct Lakeshore Business Center Phase III. See Note 11 for discussion
of a contract for the construction of Lakeshore Business Center Phase III
signed December 6, 1999.
7. Mortgages Payable
-----------------
Mortgages payable as of December 31 consist of the following:
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 $ 1,203,015 $ 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 410,622 661,446
Mortgage payable to an insurance
company, bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 381,657 614,788
Note payable to a bank, bearing interest
at a fixed rate of 8.5%, due January 29,
2001, collateral provided by NTS
Financial Partnership, an affiliate of
NTS Development Company 165,000 110,000
----------- -----------
$ 2,160,294 $ 2,739,066
=========== ===========
-40-
<PAGE>
7. Mortgages Payable - Continued
-----------------------------
Scheduled maturities of debt are as follows:
For the Years Ended December 31, Amount
-------------------------------- ------
2000 $ 229,124
2001 414,111
2002 270,842
2003 294,470
2004 320,159
Thereafter 631,588
-----------
$ 2,160,294
===========
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 $2,148,000.
The 1998 extraordinary item - early extinguishment of debt relates to the
sale of University Business Center Phase II (see discussion above). A
portion of the proceeds from the sale was used to retire the $5,128,872
mortgage payable prior to its maturity (August 2008). As a result of the
prepayment, a $763,995 penalty, of which the Partnership's proportionate
share was $96,034, was required by the insurance company who held the
mortgage. Unamortized loan costs connected with this loan were also
expensed due to the fact that the mortgage was repaid prior to its
maturity.
8. Rental Income Under Operating Leases
------------------------------------
The following is a schedule of minimum future rental income on
noncancellable operating leases as of December 31, 1999:
For the Years Ended December 31, Amount
-------------------------------- ------
2000 $ 432,980
2001 395,226
2002 355,699
2003 323,758
2004 310,270
Thereafter 172,098
-----------
$ 1,990,031
===========
9. Related Party Transactions
--------------------------
Property management fees of $38,234 (1999), $52,271 (1998) and $52,430
(1997) were paid to NTS Development Company, an affiliate of the general
partner. The fee is equal to 6% of all revenues from commercial
properties pursuant to an agreement with the Partnership. Also 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 $2,963 and $1,170 as a repair
and maintenance fee during the years ended December 31, 1999 and 1998,
respectively, 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 years ended
December 31, 1999, 1998 and 1997. 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.
-41-
<PAGE>
9. Related Party Transactions - Continued
--------------------------------------
1999 1998 1997
---- ---- ----
Administrative $ 56,575 $ 54,672 $ 59,872
Leasing 23,668 18,877 18,499
Property manager 30,721 41,161 38,105
Other 696 2,916 1,573
-------- -------- --------
$ 111,660 $ 117,626 $ 118,049
======== ======== ========
Accounts payable includes approximately $61,600 and $16,600 due NTS
Development Company at December 31, 1999 and 1998, respectively (see Note
1B).
10. Sale of Asset
-------------
On July 23, 1999, the L/U II 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. The Partnership has an 8.40% interest in the Joint
Venture. The Partnership reflects a gain of approximately $7,900
associated with this sale in the third quarter of 1999 and expects to use
the net proceeds from the sale of the land to help fund the construction
of Lakeshore Business Center III as described above.
On October 6, 1998 pursuant to a contract executed on September 8, 1998
the Lakeshore/University II Joint Venture ("L/U II") sold University
Business Center Phase II office building to Silver City Properties, Ltd.
("the purchaser") for $8,975,000. University Business Center Phase II was
owned by the L/U II Joint Venture, of which the Partnership owns a 12%
interest.
Portions of the proceeds from this sale were immediately used to pay
the remainder of the outstanding debt of approximately $5,933,382 on
University Business Center Phase II (including interest and
prepayment penalties). NTS- Properties Plus, Ltd. reflects a gain of
approximately $2,080,000 associated with this sale in the fourth
quarter of 1998. Net cash proceeds, after the pay down of the
aforementioned debt received by the Partnership from the L/U II Joint
Venture as a result of a cash distribution of the proceeds from the
sale was approximately $308,000. NTS-Properties Plus, Ltd. used a
portion of the cash distribution to make a $240,000 payment on the
$350,000 loan obtained in January 1998. A portion of the distribution
was also used to repay approximately $27,000 owed to NTS Development
Company, an affiliate of the General Partner for operating expenses.
11. Commitments and Contingencies
-----------------------------
Pursuant to a contract signed on December 6, 1999, the
Lakeshore/University 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 a $1,737,000 capital contribution from NTS-Properties V made in
July 1999 and approximately $2,680,000 debt financing obtained subsequent
to December 31, 1999. The Partnership and NTS-Properties IV, which prior
to July 1, 1999 had a 12% and 18% interest respectively, in the L/U II
Joint Venture were 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 agreed that NTS-Properties
V would make the capital contribution to the L/U II Joint Venture with
the knowledge that their Joint Venture interest would, as a result,
decrease to 8% and 12% respectively. See Note 13 for information of debt
financing obtained by the Partnership for the construction of Lakeshore
Business Center Phase III subsequent to December 31, 1999.
-42-
<PAGE>
12. Segment Reporting
-----------------
The Company's reportable operating segments include only one segment -
Commercial Real Estate Operations.
13. Subsequent Event
----------------
Subsequent to December 31, 1999, ORIG, LLC., an affiliate of the
partnership purchased Interests in the Partnership pursuant to an
Agreement, Bill of Sale and Assignment dated February 7, 2000, by and
among the Affiliate and four investors in the Partnership (the "Purchase
Agreement"). The Affiliate purchased 2,536 Interests in the Partnership
from one of the investors for total consideration of $2,536 or an average
price of $1.00 per Interest.
Subsequent to December 31, 1999, the Partnership, with the
Lakeshore/University II Joint Venture, serving as guarantor has obtained
a commitment from a bank for an amount not exceeding $2,680,000 to fund
the construction of Lakeshore Business Center Phase III. The funds will
be used by the Lakeshore/University 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.
-43-
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
---------------------
None.
-44-
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
Because the Partnership is a limited partnership and not a corporation, it has
no directors or officers as such. Management of the Partnership is the
responsibility of the General Partner, NTS-Properties Plus Associates. The
Partnership has entered into a management contract with NTS Development Company,
an affiliate of the General Partner, to provide property management services.
The General Partners of NTS-Properties Plus Associates are as follows:
J. D. Nichols
- -------------
Mr. Nichols (age 58) is the managing General Partner of NTS-Properties Plus
Associates and is Chairman of the Board of NTS Corporation (since 1985) and NTS
Development Company (since 1977).
NTS Capital Corporation
- -----------------------
NTS Capital Corporation (formerly NTS Corporation) is a Kentucky corporation
formed in October 1979. J.D. Nichols is Chairman of the Board and the sole
director of NTS Capital Corporation.
The Manager of the Partnership's properties is NTS Development Company, the
executive officers and/or directors of which are Messrs. J.D. Nichols, Brian F.
Lavin and Gregory A. Wells.
Brian F. Lavin
- --------------
Mr. Lavin (age 46), President of NTS Corporation and NTS Development Company
joined the Manager in June 1997. From November 1994 through June 1997, Mr. Lavin
served as President of the Residential Division of Paragon Group, Inc., and as a
Vice President of Paragon's Midwest Division prior to November 1994. In this
capacity, he directed the development, marketing, leasing and management
operations for the firms expanding portfolios. Mr. Lavin attended the University
of Missouri where he received his Bachelor's Degree in Business Administration.
He has served as a Director of the Louisville Apartment Association. He is a
licensed Kentucky Real Estate Broker and Certified Property Manager. Mr. Lavin
is a member of the Institute of Real Estate Management, and council member of
the Urban Land Institute. He currently serves on the University of Louisville
Board of Overseers and is on the Board of Directors of the National
Multi-Housing Council and the Louisville Science Center.
Gregory A. Wells
- ----------------
Mr. Wells (age 41), Senior Vice President and Chief Financial Officer of NTS
Corporation and NTS Development Company joined the Manager in July, 1999. From
May 1998 through July 1999, Mr. Wells served as Chief Financial Officer of
Hokanson Companies, Inc. and as Secretary and Treasurer of Hokanson Construction
Inc., Indianapolis, Indiana from January 1995 through May 1998. In these
capacities he directed financial and operational activities for commercial
rental real estate, managed property, building and suite renovations, out of
ground commercial and residential construction and third party property
management. Mr. Wells previously served as Vice President of Operations and
Treasurer of Executive Telecom Systems, Inc. a subsidiary of the Bureau of
National Affairs, Inc. (Washington, D.C.). Mr. Wells attended George Mason
University, where he received a Bachelor's Degree in Business Administration.
Mr. Wells is a Certified Public Accountant in both Virginia and Indiana and is
active in various charitable and philanthropic endeavors in the Louisville and
Indianapolis areas.
Mr. Richard L. Good, who was Vice Chairman and former President of NTS Capital
Corporation and NTS Development Company, retired effective September 3, 1999.
-45-
<PAGE>
Item 11. Management Remuneration and Transactions
----------------------------------------
The officers and/or directors of the corporate General Partner receive no direct
remuneration in such capacities. The partnership is required to pay a property
management fee based on gross rentals to NTS Development Company or an
affiliate. The Partnership is also required to pay to NTS Development Company a
repair and maintenance fee on costs related to specific projects. NTS
Development Company provides certain other services to the Partnership. See Note
9 to the financial statements which sets forth transactions with NTS Development
Company for the years ended December 31, 1999, 1998 and 1997.
The General Partner is entitled to receive cash distributions and allocations of
profits and losses from the Partnership. See Note 1D to the financial statements
which describes the methods used to determine income allocations and cash
distributions.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The General Partner is NTS-Properties Plus Associates, a Kentucky Limited
Partnership, 10172 Linn Station Road, Louisville, Kentucky 40223. The partners
of the General Partner and their total respective interests in NTS-Properties
Plus Associates are as follows:
J. D. Nichols 35.05%
10172 Linn Station Road
Louisville, Kentucky 40223
NTS Capital Corporation 9.95%
10172 Linn Station Road
Louisville, Kentucky 40223
The remaining 55% interests are owned by various limited partners of
NTS-Properties Plus Associates.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
Property management fees of $38,234 (1999), $52,271 (1998) and $52,430 (1997)
were paid to NTS Development Company, an affiliate of the General Partner. The
fee is equal to 6% of all revenues from commercial properties pursuant to an
agreement with the Partnership. Also 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
$2,963 and $1,170 as a repair and maintenance fee during the years ended
December 31, 1999 and 1998, respectively, and has capitalized this cost as a
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 years ended December 31, 1999, 1998
and 1997. 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. These charges were as follows:
1999 1998 1997
---- ---- ----
Administrative $ 56,575 $ 54,672 $ 59,872
Property manager 23,668 18,877 18,499
Leasing 30,721 41,161 38,105
Other 696 2,916 1,573
-------- -------- --------
$ 111,660 $ 117,626 $ 118,049
======== ======== ========
Accounts payable includes approximately $61,600 and $16,600 due NTS Development
at December 31, 1999 and 1998, respectively.
-46-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
----------------------------------------------------------------
1. Financial statements
The financial statements for the years ended December 31,
1999, 1998, and 1997, together with the report of Arthur
Andersen LLP dated March 24, 2000, appear in Item 8. The
following financial statement schedules should be read in
conjunction with such financial statements.
2. Financial statement schedules
Schedules: Page No.
---------- --------
III-Real Estate and Accumulated Depreciation 48-50
All other schedules have been omitted because they are not
applicable, or not required, or because the required
information is included in the financial statements or
notes thereto.
3. Exhibits
Exhibit No. Page No.
----------- --------
3. Amended and Restated Agreement and *
Certificate of Limited Partnership of
NTS-Properties Plus, Ltd., a Florida
limited partnership
10. Property Management and Construction *
Agreement between NTS Development
Company and NTS-Properties Plus, Ltd.
27. Financial Data Schedule Included
herewith
* Incorporated by reference to documents filed with the securities and Exchange
Commission in connection with the filing of the Registration Statements
on Form S-11 on July 1, 1987 (effective June 24, 1988) under Commission File
No. 33-15475.
4. Reports on Form 8-K
No reports on Form 8-K were filed during the three months
ended December 31, 1999.
-47-
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS, LTD.
-------------------------
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
-------------------------------------------------------
AS OF DECEMBER 31, 1999
-----------------------
<CAPTION>
Lakeshore
Business Blankenbaker
Center Business
Phase II Center 1A
-------- ---------
<S> <C> <C>
Encumbrances (A) (A)
Initial cost to partnership:
Land $ 3,690,531 $ 1,613,251
Buildings and improvements 7,066,267 4,414,277
Cost capitalized subsequent
to acquisition:
Improvements 1,562,338 766,573
Other (10,704,480) (B) (4,970,766) (C)
Other (718,911) (D) --
Gross amount at which carried
December 31, 1999:
Land $ 310,005 $ 861,467
Buildings and improvements 585,740 961,868
------------ ------------
Total $ 895,745 $ 1,823,335
============ ============
Accumulated depreciation $ 405,963 $ 1,157,254
============ ============
Date of construction N/A N/A
Date acquired 10/90 12/89
Life at which depreciation in
latest income statement is (E) (E)
computed
</TABLE>
(A) First mortgage held by an insurance company.
(B) Represents NTS-Properties Plus, Ltd.'s decreased interes in Lakeshore
Business Center Phase II as a result of NTS-Properties Plus Ltd.'s
contribution of its interest in this property to the Lakeshore/University
II Joint Venture in 1995.
(C) Represents NTS-Properties Plus Ltd.'s decreased interest in Blankenbaker
Business Center 1A as a result of NTS-Properties Plus Ltd.'s contribution
of Blankenbaker Business Center 1A to the Blankenbaker Business Center
Joint Venture in 1990 and as a result of capital contributions made by
NTS-Properties VII, Ltd. and NTS-Properties IV to the Blankenbaker Business
Center Joint Venture in 1994.
(D) Represents NTS-Properties Plus Ltd.'s decreased interest in Lakeshore
Business Center Phase II as a result of a capital contribution made to
the Lakeshore/University II Joint Venture by NTS-Properties in July 1999.
(E) Depreciation is computed using the straight-line method over the estimated
useful lives of the assets which are 5-30 years for land improvements,
5-30 years for buildings and improvements, 5-30 years for amenities and
life of the lease for tenant improvements.
-48-
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS, LTD.
-------------------------
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
-------------------------------------------------------
AS OF DECEMBER 31, 1999
-----------------------
<CAPTION>
Lakeshore Land Held
Business for Sale
Center and/or Total
Phase I Development Pages 48-49
------- ----------- -----------
<S> <C> <C> <C>
Encumbrances (A)
Initial cost to partnership:
Land $ 337,460 $ 6,949 $ 5,648,191
Buildings and improvements 797,848 -- 12,278,392
Cost capitalized subsequent
to acquisition:
Improvements 262,736 (20,316) 2,571,331
Other -- -- (15,675,246)
Other (602,196) (B) (69,442) (B) (1,390,549)
Gross amount at which carried
December 31, 1999: (C)
Land $ 225,511 $ (93,816) $ 1,303,167
Buildings and improvements 570,337 11,007 2,128,952
------------ ------------ ------------
Total (F) $ 795,848 $ (82,809) $ 3,432,119
============ ============ ============
Accumulated depreciation $ 447,922 $ -- $ 2,011,139
============ ============ ============
Date of construction N/A 12/99
Date acquired 01/95 N/A
Life at which depreciation in
latest income statement is (D) (E)
computed
</TABLE>
(A) First mortgage held by an insurance company.
(B) Represents NTS-Properties Plus Ltd.'s decreased interest in Lakeshore
Business Center Phase I and land held by the Lakeshore/University II
Joint Venture as a result of a capital contribution made to the
Lakeshore/University II Joint Venture by NTS- Properties V in July
1999.
(C) Aggregate cost of real estate for tax purposes is $4,868,194.
(D) Depreciation is computed using the straight-line method over the
estimated useful lives of the assets which are 5-30 years for land
improvements, 5-30 years for buildings, improvements and 5-30 years for
amenities and life of lease for tenant improvements.
(E) No depreciation was recorded for land or improvements on land in 1999.
(F) Reconciliation net of accumulated depreciation to consolidated
financial statements:
Total Gross Cost at December 31, 1999 $ 3,432,119
Additions to the Partnership
For computer software
and hardware in 1998 and 1999 2,990
-----------
Balance at December 31, 1999 $ 3,435,109
Less accumulated depreciation
- per above (2,011,139)
Less accumulated depreciation
- computer equipment (299)
-----------
Land, buildings and amenities,
net at December 31, 1999 $ 1,423,671
===========
-49-
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS, LTD.
-------------------------
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
-------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
----------------------------------------------------
<CAPTION>
Real Accumulated
Estate Depreciation
------ ------------
<S> <C> <C>
Balances at December 31, 1996 $ 3,647,551 $ 2,429,505
Additions during period:
Improvements 25,068 --
Depreciation (a) -- 150,098
Deductions during period:
Retirements (6,932) (6,914)
------------ ------------
Balances at December 31, 1997 3,665,687 2,572,689
Additions during period:
Improvements 20,430 --
Depreciation (a) -- 131,244
Deductions during period:
Retirements (b) 704,402 (353,513)
------------ -----------
Balances at December 31, 1998 4,390,519 2,350,420
Additions during period:
Improvements 55,335 --
Depreciation (a) -- 85,800
Deductions during period:
Other (c) (971,882) (417,299)
Retirements (38,863) (7,483)
------------ ------------
Balances at December 31, 1999 $ 3,435,109 $ 2,011,438
============ ============
</TABLE>
(a) The additions to accumulated depreciation on this schedule will differ from
the depreciation and amortization on the Statements of Cash Flows due to the
amortization of loan costs and the amortization of organizational and start-
up costs.
(b) Increase due primarily to retirement of negativ book basis of University
Business Center II at the time of the sale of the property.
(c) Represents NTS-Properties Plus Ltd.'s decreased interest in the Lakeshore/
University II Joint Venture as a result of a capital contribution made to
the Joint Venture by NTS-Properties V in July 1999. See Note 4C.
-50-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, NTS-Properties Plus, Ltd. has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
NTS-PROPERTIES PLUS, LTD.
-------------------------
(Registrant)
BY: NTS-Properties Associates Plus,
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: March 30, 2000
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
Form 10-K has been signed below by the following persons on behalf of the
registrant in their capacities and on the date indicated above.
Signature Title
--------- -----
/s/ J. D. Nichols General Partner of NTS-Properties
- ------------------------------ Plus Associates and Chairman of the
J. D. Nichols Board and Sole Director of NTS
Capital Corporation
/s/ Brian F. Lavin President and Chief Operating
- ------------------------------ Officer of NTS Capital Corporation
Brian F. Lavin
/s/Gregory A. Wells Senior Vice President and
- ----------------------------- Chief Financial Officer of
Gregory A. Wells NTS Capital Corporation
The Partnership is a limited partnership and no proxy material has been sent to
the limited partners.
- 51 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS
OF DECEMBER 31, 1999 AND FROM THE STATEMENT OF OPERATIONS FOR THE YEAR ENDED
DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 182,517
<SECURITIES> 0
<RECEIVABLES> 3,763
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 1,423,671
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,736,851
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 2,160,294
0
0
<COMMON> 0
<OTHER-SE> (596,294)
<TOTAL-LIABILITY-AND-EQUITY> 1,736,851
<SALES> 639,747
<TOTAL-REVENUES> 656,779
<CGS> 0
<TOTAL-COSTS> 464,170
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 206,672
<INCOME-PRETAX> (14,063)
<INCOME-TAX> 0
<INCOME-CONTINUING> (14,063)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,063)
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1>THE PARTNERSHIP HAS AN UNCLASSIFIED BALANCE SHEET,THEREFORE THE VALUE IS $0.
</FN>
</TABLE>
