Item 4 Submission of Matters to a Vote of Security Holders 15
PART II
Item 5

Item 5 Market for the Registrant's Limited Partnership Interests and Related Partner Matters 16 Item 6

Item 6 Selected Financial Data 17 Item 7

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations - ---------------------
The occupancy levels at the Partnership properties as of December 31 were as follows:
Percentage Ownership at 12/31/95 1995 1994 1993 -------- ---- ---- ----
Wholly-owned Property - ---------------------
Lakeshore Business Center Phase II N/A See (1) below (1) 78% 75%
Property owned in Joint Venture with NTS-Properties V - ---------------------
University Business Center Phase II N/A See (1) below (1) 100% 100%
Property owned in Joint Venture with NTS-Properties IV and NTS- Properties VII, Ltd. - --------------------
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 12% 92% 80% 58% (2) (2)
Lakeshore Business Center Phase II 12% 72% See See above above (1) (1)
University Business Center Phase II 12% 100% See See above above (1) (1)
(1) During the first quarter of 1995, the Partnership's ownership interest in the property changed. See pages 20 and 21 for a discussion regarding this change. (2) As of December 31, 1994 and 1993, the Partnership did not have an interest in this property. See pages 20 and 21 for a discussion regarding this change.
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Results of Operations - Continued - ---------------------------------
The rental and other income generated by the Partnership's properties for the years ended December 31, 1995, 1994 and 1993 were as follows:
Percentage Ownership at 12/31/95 1995 1994 1993 ----------- ---------- ----------- -----------
Wholly-owned Property - ---------------------
Lakeshore Business Center Phase II N/A $ 98,182 $1,259,257 $1,221,550 (1)
Property owned in Joint Venture with NTS- Properties V - ------------
University Business Center II N/A $ 82,183 $ 959,948 $ 964,826 (1)
Property owned in Joint Venture with NTS- Properties IV and NTS- Properties VII, Ltd. - --------------------
Blankenbaker Business Center 1A 39% $ 363,172 $ 497,566 $ 564,649
Properties owned through Lakeshore/University II Joint Venture (L/U II Joint Venture - -------------
Lakeshore Business Center Phase I 12% $ 135,055 N/A (2) N/A (2)
Lakeshore Business Center Phase II 12% $ 135,324 N/A (3) N/A (3)
University Business Center Phase II 12% $ 139,477 N/A (3) N/A (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) During the first quarter of 1995, the Partnership's ownership interest in the property changed. The Partnership's proportionate share of rental and other income from January 23, 1995 to December 31, 1995 is reflected below (see L/U II Joint Venture). See pages 20 and 21 for a discussion regarding this change. (2) During 1994 and 1993, the Partnership did not have an interest in this property. See pages 20 and 21 for a discussion regarding the change which occurred during the first quarter of 1995. (3) During the first quarter of 1995, the Partnership's ownership interest in this property changed. Rental and other income for 1994 and 1993 is reflected above. See pages 20 and 21 for a discussion regarding this change.
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Results of Operations - Continued - ---------------------------------
On August 16, 1994, Blankenbaker Business Center Joint Venture amended its joint venture agreement to admit NTS-Properties IV 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 this 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 was a result of winning a competitive request for proposals issued by Prudential as it approached a decision regarding where it would locate its expanding Louisville operations following the expiration of its lease at Blankenbaker Business Center 1A. To meet the needs of the tenant, 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 now occupies 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 $1.4 million.
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 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%.
On January 23, 1995, a new joint venture known as Lakeshore/University II Joint Venture (L/U II Joint Venture) was formed among the Partnership, NTS- Properties IV, NTS-Properties V and NTS/Fort Lauderdale, Ltd., affiliates of the general partner of the Partnership, for purposes of owning Lakeshore Business Center Phases I and II, University Business Center Phase II and certain undeveloped tracts adjacent to the Lakeshore Business Center Development.
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Results of Operations - 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 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.
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 joint venture. Mortgages have been recorded on Lakeshore Business Center Phase I in the amount of $5,500,000, and 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 prior to the formation of the 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.
The general partner of the Partnership believes that the results of operations for 1995 and 1994 are not comparable and therefore, a discussion comparing the results of operations for these periods is not included due to the fact that the Partnership's ownership interest in the Blankenbaker Business Center Joint Venture changed from 69% to 39% on August 16, 1994 as a result of capital contributions made by affiliates of the general partner of the Partnership (as discussed on page 19). Comparisons of the results of operations between 1995 and 1994 are also difficult because of the Partnership's investment in the L/U II Joint Venture (as discussed above). These changes in the Partnership's investments are permanent changes and will effect future results of operations.
Discussions regarding the change in occupancy levels from 1994 to 1995 and from 1993 to 1994 along with a discussion comparing the results of operations from 1994 to 1993 follows.
The 6% decrease in year-ending occupancy at Lakeshore Business Center Phase II from 1994 to 1995 can be attributed to four tenant move-outs totalling approximately 9,600 square feet and a downsizing by a current tenant of its existing space of approximately 6,000 square feet. Two of the move-outs, totalling approximately 5,800 square feet, represent tenants who vacated the premises at the end of the lease term. The third tenant, who occupied approximately 1,400 square feet, vacated the premises and ceased making rental payments in breach of the lease terms due to bankruptcy. The write-off of accrued income connected with this lease was not significant. The
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Results of Operations - Continued - ---------------------------------
fourth tenant, who occupied approximately 2,400 square feet, vacated the premises prior to the end of the lease term but is continuing to pay rent through the end of the lease term. Partially offsetting the tenant move- outs are six new leases for a total of approximately 9,700 square feet. Average occupancy at Lakeshore Business Center Phase II decreased from 78% (1994) to 76% (1995).
Subsequent to December 31, 1995, a new six-year lease was signed at Lakeshore Business Center Phase II for approximately 7,000 square feet. The tenant is expected to take occupancy during the second quarter of 1996. With this new lease, the buildings occupancy will increase to 79%.
Lakeshore Business Center Phase II's year-ending occupancy increased 3% from 1993 to 1994. The increase in occupancy can be attributed to three new leases for a total of approximately 10,000 square feet, an expansion of approximately 1,900 square feet by a current tenant and the fact that the business center's leasing office was relocated from Lakeshore Business Center Phase I (previously owned by a joint venture between NTS-Properties IV and NTS-Properties V, affiliates of the general partner) to an approximately 1,200 square foot suite in Lakeshore Business Center Phase II. The increases in occupancy are partially offset by an approximately 4,700 square foot downsizing by a current tenant. In accordance with the lease agreement, the tenant paid the Partnership a total of approximately $48,500 during the second and third quarters of 1994 to compensate the Partnership for lost rents and undepreciated renovation costs (recorded as lease buyout income). The increases in occupancy are also partially offset by an approximately 2,300 square foot move-out by a tenant who vacated before the end of the lease term, but continued to make rental payments through the end of the lease term. There was no write-off of accrued income in connection with this lease. Additionally, the increases in occupancy are partially offset by an approximately 3,600 square foot move-out by a tenant who vacated and ceased making rental payments in breach of the lease agreement. Accrued income associated with this lease of approximately $17,000 was written off as uncollectible after it was determined that there was no possible collection. The accrued income which was written off is attributed to the straight-line method of accounting for rental income. Average occupancy at Lakeshore Business Center Phase II increased from 75% in 1993 to 78% in 1994.
Rental and other income at Lakeshore Business Center Phase II increased from 1993 to 1994 as a result of the increase in average occupancy, a decrease in the provision for doubtful accounts, an increase in lease buyout income and an increase in common area expense reimbursements. Tenants reimburse the Partnership for common area expenses as a part of the lease agreement. The increase in rental and other income at Lakeshore Business Center Phase II from 1993 to 1994 is partially offset by the accrued income write-off of approximately $17,000 (as discussed above) and a decrease in rental rates.
Philip Crosby Associates, Inc. ("PCA") has leased 100% of University Business Center Phase II. The lease term is for seven years, and the tenant took occupancy in April 1991. The tenant has currently sub-leased approximately 50,000 square feet (or 64%) of University Business Center Phase II. Of the total being sub-leased, approximately 41,000 square feet (or 52%) is being leased by Full Sail Recorders, Inc. (a major tenant at University Business Center Phase I). Prior to December 31, 1995, Full Sail Recorders, Inc. ("Full Sail") signed a 33 month lease with the L/U II Joint Venture for the approximately 41,000 square feet it currently sub-leases from PCA. The lease term commences April 1998 when PCA's lease ends. As part of the lease negotiations, Full Sail will receive a $200,000 tenant finish allowance in 1996, of which approximately $92,000 will be reimbursed by Full Sail over a 27-month period beginning January 1996. At this time, it is not known whether Philip Crosby Associates, Inc. or the other sub- lessee will renew the current lease with the business center when the
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Results of Operations - Continued - ---------------------------------
original lease expires in 1998. In August 1990, the tenant paid an $80,000 security deposit which was to be returned three years from the date of occupancy. The security deposit plus interest was returned to Philip Crosby Associates, Inc. in April 1994.
The decrease in rental and other income at University Business Center Phase II from 1993 to 1994 is due to a decrease in common area expense reimbursements. The tenant reimburses the Partnership for common area expenses as a part of the lease agreement. The decrease in rental and other income at University Business Center Phase II from 1993 to 1994 is partially offset by a rent escalation which is based on changes in the consumer price index.
A wholly-owned subsidiary of The Prudential Insurance Company of America (Prudential Service Bureau, Inc.) has leased 100% of Blankenbaker Business Center 1A. During 1994, Prudential Service Bureau, Inc. signed a lease renewal and expansion. The renewal extends the current lease through July 2005. With the expansion, the tenant occupied 100% of the business center during the third quarter of 1994. See page 20 for a further discussion of the lease renewal and expansion. In addition to monthly rent payments, Prudential Service Bureau, Inc. is obligated to pay substantially all of the operating expenses attributable to its space. Blankenbaker Business Center 1A's rental and other income decreased from 1993 to 1994 as a result of the Partnership's decreased ownership in the Blankenbaker Business Center Joint Venture. (See page 20 for a discussion regarding the change in ownership.)
The 12% increase in year-ending occupancy at Lakeshore Business Center Phase I from 1994 to 1995 can be attributed to 11 new leases, totalling approximately 19,000 square feet which includes approximately 6,400 square feet in expansions by two current tenants. The new leases and expansion are partially offset by four tenant move-outs, who vacated at the end of the lease terms, totalling approximately 6,100 square feet. Average occupancy increased from 70% (1994) to 84% (1995).
During January 1996, Lakeshore Business Center Phase I's occupancy increased to 98% as a result of approximately 6,400 square feet of expansions by two current tenants.
The 22% increase in year-ending occupancy at Lakeshore Business Center Phase I from 1993 to 1994 can be attributed to 12 new leases totalling approximately 32,700 square feet which includes approximately 3,100 square feet in expansions by three current tenants. Included in the new leases is a five-year, approximately 9,400 square foot lease which commenced during the second quarter of 1994 and a five-year, approximately 6,400 square foot lease which commenced during the third quarter of 1994. The new leases and expansions are partially offset by an approximately 1,200 square foot downsizing by an existing tenant and four tenants, who occupied approximately 7,300 square feet, vacating at the end of the lease terms. In addition to the move-outs and downsizing, the business center's leasing office of approximately 1,500 square feet was relocated to Lakeshore Business Center Phase II. The leasing office was relocated in order to accommodate an approximately 9,400 square foot new lease. Average occupancy at Lakeshore Business Center Phase I increased from 56% (1993) to 70% (1994).
In cases of tenants who cease making rental payments or abandon the premises in breach of their lease, the Partnership pursues collection through the use of collection agencies and other remedies available by law when practical.
Interest and other income includes interest earned from short-term investments made by the Partnership with excess cash. The increase in interest income from 1993 to 1994 is the result of an increase in cash available for investment.
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Results of Operations - Continued - ---------------------------------
Operating expenses increased from 1993 to 1994 as a result of increased exterior painting costs at University Business Center Phase II, increased snow removal costs at Blankenbaker Business Center 1A and increased repair and maintenance costs at Lakeshore Business Center Phase II and University Business Center Phase II. The increases in operating expenses are partially offset by decreased landscaping costs at Lakeshore Business Center Phase II and University Business Center Phase II. The increase in operating expenses from 1993 to 1994 is net of the decrease caused by the Partnership's decreased ownership in the Blankenbaker Business Center Joint Venture. (See page 20 for a discussion regarding the change in ownership.)
Operating expenses - affiliated increased from 1993 to 1994 as a result of increased leasing costs. The increase in operating expenses - affiliated from 1993 to 1994 is net of the decrease caused by the Partnership's decreased ownership in the Blankenbaker Business Center Joint Venture. (See page 20 for a discussion regarding the change in ownership.) Operating expenses - affiliated are expenses incurred for services performed by employees of NTS Development Company, an affiliate of the General Partner of the Partnership.
The 1994 write-off of unamortized tenant improvements is primarily a result of the lease renewal and expansion of Prudential Service Bureau, Inc., the tenant which occupies 100% of Blankenbaker Business Center 1A. As a condition of the lease renewal and expansion, it was agreed that the area into which the tenant expanded would be renovated. Changes to current tenant 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. In order to complete the renovations, it is sometimes necessary to replace improvements which had not been fully depreciated. This results in a write-off of unamortized tenant improvements.
The 1993 write-off of unamortized tenant improvements is the result of an approximately 3,400 square foot lease renewal plus an additional 2,000 square foot expansion by a current tenant at Lakeshore Business Center Phase II.
Amortization of capitalized leasing costs represents the amortization of various costs which were capitalized during the initial leasing and start-up period of University Business Center Phase II. The amortization of these costs commenced when Philip Crosby Associates, Inc. occupied the building in April 1991. Amortization of capitalized leasing costs was fairly constant from 1993 to 1994.
The increase in interest expense from 1993 to 1994 is a result of increases in the Prime Rate from 6% at December 31, 1993 to 8.5% at December 31, 1994. The increase in interest expense is also a result of interest incurred in 1994 due to the non-payment of the 1993 real estate taxes associated with University Business Center Phase II, Lakeshore Business Center Phase II and land adjacent to the Lakeshore Business Center development by the March 31, 1994 due date. The University Business Center Phase II's taxes plus interest were paid during the second quarter of 1994. The 1993 real estate taxes associated with Lakeshore Business Center Phase II and land adjacent to the Lakeshore Business Center development were paid subsequent to December 31, 1994. The increase in interest expense from 1993 to 1994 is net of the decrease caused by the Partnership's decreased ownership in the Blankenbaker Business Center Joint Venture. (See page 20 for a discussion regarding the change in ownership.) See the Liquidity and Capital Resources section of this item for details regarding the Partnership's debt.
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Results of Operations - Continued - ---------------------------------
Management fees are calculated based on cash collections; however, revenue for reporting purposes is on the accrual basis. As a result, the fluctuations between periods are not consistent with the fluctuations of management fee expense.
The increase in real estate taxes from 1993 to 1994 is the result of additional taxes being expensed in 1994 for the 1993 taxes of University Business Center Phase II, Lakeshore Business Center Phase II and the land adjacent to the Lakeshore Business Center development. The Partnership was unable to take advantage of available discounts due to the cash requirements of the Partnership. Real estate taxes for Blankenbaker Business Center 1A remained fairly constant. The increase in real estate taxes from 1993 to 1994 is also due to an increase in the 1994 property tax assessment for University Business Center Phase II. The increase in real estate taxes from 1993 to 1994 is net of the decrease caused by the Partnership's decreased ownership in the Blankenbaker Business Center Joint Venture. (See page 20 for a discussion regarding the change in ownership.)
The decrease in professional and administrative expenses from 1993 to 1994 is due to a decrease in outside legal costs and loan fees. In 1993, loan fees were paid to extend the maturity date of the $9,240,000, $1,270,000 and $470,000 (balances as of December 31, 1994) notes payable from December 31, 1992 to February 17, 1993. There was no similar expense in 1994. The decrease in professional and administrative expenses from 1993 to 1994 is partially offset by the write-off of unamortized loan costs which were associated with the Blankenbaker Business Center Joint Venture's notes payable. The loan fees were expensed due to the fact that the notes were retired during 1994.
Professional and administrative expenses - affiliated remained fairly constant from 1993 to 1994. Professional and administrative expenses affiliated are expenses incurred for services performed by employees of NTS Development Company, an affiliate of the General Partner.
The decrease in depreciation and amortization from 1993 to 1994 is a result of a portion of organizational and start up costs having become fully amortized during the fourth quarter of 1993 and a portion of Lakeshore Business Center Phase II's tenant finish assets having become fully depreciated. These decreases are partially offset by depreciation on new tenant finish improvements at Blankenbaker Business Center 1A and Lakeshore Business Center Phase II and by the amortization of additional loan costs incurred in connection with extending the maturity dates of the Partnership's notes payable. The decrease in depreciation and amortization from 1993 to 1994 is net of the decrease caused by the Partnership's decreased ownership in Blankenbaker Business Center Joint Venture. (See page 20 for a discussion regarding the change in ownership.) Depreciation is computed using the straight-line method over the estimated useful lives of the assets which are 5 - 30 years for land improvements, 30 years for buildings, 5 - 30 years for building improvements and 5 - 30 years for amenities. The aggregate cost of the Partnership's properties for Federal tax purposes is approximately $6,900,000.
Capital Resources and Liquidity - -------------------------------
Cash (used in) provided by operations was $(242,385) (1995), $402,028 (1994) and $640,167 (1993). The Partnership has not made any cash distributions since the quarter ended June 30, 1991. Distributions will be resumed once the Partnership has established adequate cash reserves and is generating cash from operations which, in management's opinion, is sufficient to warrant future distributions. The primary source of future liquidity and distributions is expected to be derived from cash generated by the Partnership's properties after adequate cash reserves are established for future leasing costs, tenant finish costs and capital improvements. Cash reserves (which are unrestricted cash and equivalents as shown on the Partnership's balance sheet as of December 31) were $36,269, $244,288 and $156,081 at December 31, 1995, 1994 and 1993, respectively.
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Capital Resources and Liquidity - Continued - -------------------------------------------
On January 20, 1995, the Partnership entered into debt refinancing agreements with the banks that held the following notes:
Note Balance at 01/20/95 Encumbered Property ----------- -------------------
$9,240,000 Lakeshore Business Center Phase II 1,270,000 Outparcel building sites (3.8 acres) 468,333 Outparcel building sites (3.8 acres) 5,776,000 University Business Center Phase II
The debt refinancing agreements extended the maturity date of all notes to January 31, 1998 and interest was fixed at 10.6%. In accordance with the debt refinancing agreements, principal payments required on the $9,240,000, $1,270,000 and $5,776,000 notes are as follows:
a) 12 monthly payments of $3,000 each , the first of which was due at closing. The second through 12th payments are due on the first day of February through December 1995. b) 12 monthly payments of $12,000 each, commencing on January 1, 1996 through December 1, 1996. c) 13 monthly payments of $15,000 each, commencing on January 1, 1997 through January 1, 1998. d) Balloon payment due at maturity on January 31, 1998.
The debt refinancing was concluded in conjunction with the formation of the Lakeshore/University II Joint Venture. For a discussion regarding the new joint venture, see pages 20 and 21.
As of December 31, 1995, the L/U II Joint Venture had notes payable to banks in the following amounts: $9,204,000, $5,740,000, $1,234,000, $468,333 and $340,000. The notes are a liability of the joint venture in accordance with the Joint Venture Agreement. The Partnership's proportionate interest in the notes at December 31, 1995 was $1,156,943, $721,518, $155,114, $58,869 and $42,738, respectively. As part of the loan agreements with the banks, the Joint Venture is required to place in escrow funds for capital expenditures, leasing commissions and tenant improvements at the properties owned by the Joint Venture. During the term of the loans, the Joint Venture is required to fund a total of $200,000 to the escrow account. As of December 31, 1995, the Joint Venture had met this funding requirement. The notes bear interest at a fixed rate of 10.6%, are due January 31, 1998 and are secured by the assets of the joint venture. See the discussion above regarding principal payments required on the $9,204,000, $5,740,000 and $1,234,000 notes.
Subsequent to December 31, 1995, the L/U II Joint Venture submitted an application with an insurance company for $17.4 million of debt financing. The proceeds from the loan will be used to pay off the Joint Venture's current debt financings of approximately $16.9 million. The remaining proceeds will be used to fund Joint Venture tenant finish improvements, leasing costs and loan closing costs. The Joint Venture anticipates that the financing will be completed during mid-1996.
As of December 31, 1995, the Blankenbaker Business Center Joint Venture had a mortgage payable with an insurance company (obtained November 1994) in the amount of $4,500,239. The mortgage is recorded as a liability of the Joint Venture and is secured by the assets of the Joint Venture. The Partnership's proportionate interest in the mortgage at December 31, 1995 is $1,736,192. 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.
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Capital Resources and Liquidity - Continued - -------------------------------------------
The majority of the Partnership's 1995 cash flows was derived from the use of cash reserves. The majority of the Partnership's 1994 and 1993 cash flow was derived from operating activities. Cash flows used in investing activities include tenant finish improvements. Changes to current tenant finish improvements are a typical part of any lease negotiation. Improvements generally include a revision to the current floor plan to accommodate a tenant's needs, new carpeting and paint and/or wallcovering.
The extent and cost of these improvements are determined by the size of the space and whether the improvements are for a new tenant or incurred because of a lease renewal. Cash flows provided by (used in) investing activities also include an increase (decrease) in construction payables. Cash flows used in investing activities were funded by cash flow from operating activities and capital contributions (as discussed on pages 20 and 21). Cash flows provided by investing activities in 1994 and 1993 were the result of a release from the funds escrowed for tenant finish improvements at Lakeshore Business Center Phase II. Cash flows provided by investing activities in 1995 were also the result of a release from the funds escrowed for capital expenditures, leasing commissions and tenant finish improvements at the properties owned by the L/U II Joint Venture partially offset by deposits made to the L/U II Joint Venture escrow as required by the loan agreements (discussed on page 26). Cash flows used in investing activities (1993) also include cash which was escrowed for tenant improvements at Lakeshore Business Center Phase II as required by a July 1993 loan extension agreement. Cash flows provided by financing activities are derived from increases in the Partnership's debt level (1993) and the Blankenbaker Business Center Joint Venture's debt level (1994). Cash flows used in financing activities are for loan costs and principal payments on mortgage and notes payable. The capital contribution by a joint venture partner represents the Partnership's interest in the L/U II Joint Venture's (1995) and Blankenbaker Business Center Joint Venture's (1994) increase in cash which resulted from a capital contribution. The Partnership utilizes the proportionate consolidation method of accounting for joint venture properties. The Partnership's interest in the joint venture's assets, liabilities, revenues, expenses and cash flows are combined on a line-by- line basis with the Partnership's own assets, liabilities, revenues, expenses and cash flows. The Partnership does not expect any material change in the mix and relative cost of capital resources except that which is discussed in the following paragraph.
In the next 12 months, the demand on future liquidity will increase as a result of cash requirements connected with the required principal payments of the L/U II Joint Venture's notes payable (as discussed on page 26) and as a result of the Blankenbaker Business Center Joint Venture's permanent financing obtained November 1994 (see page 26). The Partnership also expects the demand on future liquidity to increase as a result of future leasing activity at Lakeshore Business Center Phases I and II. At this time, the future leasing and tenant finish costs which will be required to renew the current leases or obtain new tenants are unknown. It is anticipated that the cash flow from operations, cash reserves and the escrow funds as discussed on page 26 will be sufficient to meet the needs of the Partnership.
Due to the fact that no distributions were made during 1995, 1994 or 1993, 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.
At December 31, 1995, none of the Partnership's properties were in the construction stage.
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Capital Resources and Liquidity - 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 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 and the escrow funds which are described on page 26.
As of December 31, 1995, the L/U II Joint Venture had commitments for approximately $200,000 of tenant finish improvements and leasing costs. The commitments are the result of an 8,200 square foot new lease and a 7,100 square foot lease renewal. Both leases are for a period of five years. The Partnership's proportionate share of these commitments is approximately $24,000 or 12%. As of December 31, 1995, approximately $130,000 had been incurred toward these commitments, of which the Partnership's proportionate share is approximately $16,000 or 12%.
As of December 31, 1995, the L/U II Joint Venture also had a commitment for a $200,000 special tenant finish allowance, of which approximately $92,000 will be reimbursed by the tenant over a 27-month period beginning in January 1996. This commitment is the result of lease negotiations with Full Sail Recorders, Inc. ("Full Sail") which currently sub-leases approximately 41,000 square feet from Philip Crosby Associates, Inc. ("PCA") at University Busienss Center Phase II. PCA currently leases 100% of the business center through April 1998. Full Sail's lease term with the Joint Venture is for 33 months (April 1998 to December 2000). The Partnership's proportionate share of net commitment ($200,000 less $92,000) is approximately $13,000 or 12%.
Subsequent to December 31, 1995, a new six-year lease was signed at Lakeshore Busienss Center Phase II for approximately 7,000 square feet. As a result of the new lease, the L/U II Joint Venture has a commitment for approximately $105,000 of tenant finish improvements of which the Partnership's proportionate share is $13,000 or 12%.
The Partnership had no other material commitments for renovations or capital improvements at December 31, 1995.
The L/U II Joint Venture owns approximately 6 acres of land adjacent to the Lakeshore Business Center development in Ft. Lauderdale, Florida. The Partnership's proportionate interest at December 31, 1995 in the land held for development is approximately $97,000. The Joint Venture currently has a contract for the sale of .7 acres of this land for $175,000.
Historically, extremely weak economic conditions in Ft. Lauderdale, Florida have caused the low occupancy levels at Lakeshore Business Center Phases I and II. In the opinion of the general partner, leasing activity is improving in this part of Florida. In an effort to continue to improve the occupancy at Lakeshore Business Center Phases I and II, the Partnership has an on-site leasing agent, an employee of NTS Development Company (an affiliate of the general partner), who makes calls to potential tenants, negotiates lease renewals with current tenants and manages local advertising with the assistance of NTS Development Company's marketing staff. The leasing and renewal negotiations of University Business Center Phase II are handled by a leasing agent, an employee of NTS Development Company, located at the University Business Center development.
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Capital Resources and Liquidity - Continued - -------------------------------------------
Leases at the Partnership's properties provide for tenants to contribute toward the payment of common area expenses, insurance and real estate taxes. Leases at the Partnership's properties also provide for rent increases which are based upon increases in the consumer price index. These lease provisions should protect the Partnership's operations from the impact of inflation and changing prices.
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Item 8.

Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------
To NTS-Properties Plus Ltd:
We have audited the accompanying balance sheets of NTS-Properties Plus Ltd. (a Florida limited partnership) as of December 31, 1995 and 1994, and the related statements of operations, partners' equity, and cash flows for each of the three years in the period ended December 31, 1995. 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 generally accepted auditing standards. 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, 1995 and 1994 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles.
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 are not 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 February 14, 1996
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The accompanying notes to financial statements are an integral part of these statements.
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The accompanying notes to financial statements are an integral part of these statements.
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The accompanying notes to financial statements are an integral part of these statements.
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The accompanying notes to financial statements are an integral part of these statements.
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NTS-PROPERTIES PLUS LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
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) 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 on approximately 5.2 acres of land in Louisville, Kentucky.
- A 12% 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.
- University Business Center Phase II - a business center with approximately 78,000 net rentable first floor (office and service) and second floor office square feet and approximately 10,000 net rentable mezzanine square feet located in Orlando, Florida.
- Outparcel Building Sites - approximately 6.2 acres of undeveloped land adjacent to the Lakeshore Business Center development which is zoned for commercial development.
C) 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
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1. Significant Accounting Policies - Continued -------------------------------------------
C) Allocation of Net Income (Loss) and Cash Distributions - Continued ------------------------------------------------------------------
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.
D) 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 loss for financial statement purposes versus that for income tax reporting is as follows:
1995 1994 1993 ---------- ----------- -----------
Net loss $ (386,230) $(1,803 166) $(1,754,067)
Items handled differently for tax purposes: Write-off of unamortized tenant finish improvements (8,328) (83,565) (67,656) Allowance for doubtful accounts 2,015 (11,739) 21,832 Depreciation and amortization 174,563 963,035 1,231,928 Capitalized leasing costs 5,065 41,693 41,323 Rental income 54,108 290,001 212,888 ---------- ----------- -----------
Taxable loss (158,807) $ (603,741) $ (313,752) ========== =========== ===========
E) 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.
F) 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.
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1. Significant Accounting Policies - Continued -------------------------------------------
G) Cash and Equivalents - Restricted ---------------------------------
Cash and equivalents - restricted represents escrow funds which are to be released as capital expenditures, leasing commissions and tenant improvements are incurred at the properties owned by the Lakeshore/University II Joint Venture and funds which have been escrowed with mortgage companies for property taxes in accordance with the loan agreements.
H) 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 and 5 - 30 years for amenities.
In March 1995, the Financial Accounting Standards Board issued Statement No. 121 (the "Statement") on accounting for the impairment of long-lived assets, certain identifiable intangibles, and goodwill related to assets to be held and used. The Statement also establishes accounting standards for long-lived assets and certain identifiable intangibles to be disposed of. The Partnership is required to adopt the Statement no later than January 1, 1996, although earlier implementation is permitted. The Statement is required to be applied prospectively for assets to be held and used. The initial application of the Statement to assets held for disposal is required to be reported as the cumulative effect of a change in accounting principle.
The Partnership plans to adopt the Statement as of January 1, 1996. Based on a preliminary review, the Partnership does not anticipate that any material adjustments will be required.
I) Capitalized Leasing Costs -------------------------
The Partnership has capitalized certain costs associated with the initial leasing of the properties. These costs are being amortized over a five year period.
J) Organizational and Start-up Costs ---------------------------------
Organizational costs are expenses incidental to the creation of the Partnership and joint ventures such as legal and accounting fees. Start-up costs are partnership administration expenses which are capitalized until the Partnership acquires its first property for development and construction. Organizational costs are amortized over a five-year period beginning when investors' funds are released from escrow. Start-up costs are amortized over a five-year period beginning when the first property is acquired.
K) 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 totalled $107,413 and $762,683 as of December 31, 1995 and 1994, 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.
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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 1994 and 1993 Financial Statements ------------------------------------------------------
Certain reclassifications have been made to the December 31, 1994 and 1993 financial statements to conform with December 31, 1995 classifications. These classifications have no effect on previously reported operations.
2. Concentration of Credit Risk ----------------------------
NTS-Properties Plus Ltd. has a joint venture investment in commercial properties in Kentucky (Louisville) and Florida (Orlando and Ft. Lauderdale). Substantially all of the tenants are local businesses or are businesses which have operations in the location in which they lease space. The Kentucky property is occupied by one tenant.
3. 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 78,000 square foot business center, in Orlando, Florida. NTS-Properties V contributed land valued at $1,460,000 and the Partnership contributed development and carrying costs of approximately $8 million. 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% prior to its contribution to the Lakeshore/University II Joint Venture. The Partnership's share of the Joint Venture's net operating income was $12,946 (1995), $143,953 (1994) and $171,391 (1993).
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 see Note 3C to the Partnership's 1995 financial statements.
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
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3. Investment in Joint Ventures - Continued ----------------------------------------
B) Blankenbaker Business Center Joint Venture - Continued ------------------------------------------------------
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 this 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 expands Prudential's leased space by approximately 15,000 square feet and extends 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 now occupies 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 $1.4 million.
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
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3. Investment in Joint Ventures - Continued ----------------------------------------
B) Blankenbaker Business Center Joint Venture - Continued ------------------------------------------------------
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%.
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, 1995. The Partnership's share of the Joint Venture's net operating loss was $79,234 (1995), $302,899 (1994) and $256,432 (1993).
C) Lakeshore/University II Joint Venture -------------------------------------
On January 23, 1995, a new joint venture known as 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 and certain undeveloped tracts 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) 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 have been recorded on Lakeshore Business Center Phase I in the amount of $5,500,000, and 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 prior to the formation of the joint venture. In
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3. Investment in Joint Ventures - Continued ----------------------------------------
C) Lakeshore/University II Joint Venture - Continued -------------------------------------------------
addition to the above, NTS-Properties IV also contributed $750,000 to the L/U II Joint Venture. The Partnership's ownership share was 12% at December 31, 1995. The Partnership's share of the joint ventures net operating loss was $155,457 in 1995.
4. Land, Buildings and Amenities -----------------------------
The following schedule provides an analysis of the Partnership's investment in property held for lease as of December 31:
1995 1994 ----------- -----------
Land and improvements $ 1,847,061 $ 6,260,269 Buildings and improvements 1,690,674 14,456,717 Amenities 8,306 6,712 ---------- ----------
3,546,041 20,723,698
Less accumulated depreciation 2,291,213 5,821,480 ---------- ----------
$ 1,254,828 $14,902,218 ========== ==========
5. Land Held for Development -------------------------
Land held for development at December 31, 1995 represents the Partnership's proportionate share of approximately 6.2 acres of land owned by the L/U II Joint Venture which is adjacent to the Lakeshore Business Center development in Ft. Lauderdale, Florida. The Joint Venture currently has a contract for the sale of .7 acres of this land for $175,000.
Land held for development at December 31, 1994 represents a 3.8 acre parcel of land adjacent to the Lakeshore Business Center development which the Partnership acquired on October 15, 1990. On January 23, 1995, the Partnership contributed this land held to the L/U II Joint Venture. See Note 3C of the Partnership's 1995 financial statements for a further discussion of the L/U II Joint Venture.
6. Mortgage and Notes Payable --------------------------
Mortgage and notes payable as of December 31 consist of the following:
1995 1994 ----------- ----------- Note payable to a bank bearing interest at a fixed rate of 10.6%, due January 31, 1998, secured by land and building $ 721,518 $ 5,786,000 Note payable to a bank bearing interest at a fixed rate of 10.6%, due January 31, 1998, secured by land 58,869 470,000
Note payable to a bank bearing interest at a fixed rate of 10.6%, due January 31, 1998, secured by land and building 1,156,943 9,240,000 Note payable to a bank bearing interest at a fixed rate of 10.6%, due January 31, 1998, secured by land 155,114 1,270,000
(continued next page)
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6. Mortgage and Notes Payable - Continued --------------------------------------
1995 1994 ----------- ----------- Note payable to a bank bearing interest at a fixed rate of 10.6%, due January 31, 1998, secured by land $ 42,738 $ --
Mortgage payable to an insurance company, bearing interest at a fixed rate of 8.5%, due November 15, 2005, secured by land and building 1,736,192 1,846,183 ---------- ---------- $ 3,871,374 $18,612,183 ========== ==========
Scheduled maturities of debt are as follows:
For the Years Ended December 31, Amount -------------------------------- --------- 1996 $ 170,895 1997 194,776 1998 2,151,116 1999 150,323 2000 163,610 Thereafter 1,040,654 ---------
$ 3,871,374 =========
Based on the borrowing rates currently available to the Partnership for loans with similar terms and average maturities, the fair value of long-term debt is approximately $4,400,000.
7. Rental Income Under Operating Leases ------------------------------------
The following is a schedule of minimum future rental income on noncancellable operating leases as of December 31, 1995:
For the Years Ended December 31, Amount -------------------------------- --------- 1996 $ 586,541 1997 550,574 1998 436,685 1999 351,808 2000 318,684 Thereafter 1,347,332 ---------
$ 3,591,624 ==========
8. Related Party Transactions --------------------------
Property management fees of $59,849 (1995), $180,332 (1994) and $181,000 (1993) 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 permitted by the partnership agreement, NTS Development Company will receive a repair and maintenance fee equal to 5.9% of costs incurred which relate to capital improvements. The Partnership has incurred $6,446 and $21,607 as a repair and maintenance fee during the years ended December 31, 1995 and 1994, respectively, and has capitalized this cost as part of land, buildings and amenities.
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8. Related Party Transactions - Continued --------------------------------------
As permitted by the partnership agreement, the Partnership was also charged the following amounts from NTS Development Company for the years ended December 31, 1995, 1994 and 1993. 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:
1995 1994 1993 -------- -------- --------
Administrative $110,191 $125,031 $120,181 Leasing 17,194 60,213 56,158 Property manager 38,675 116,074 115,228 Other 2,482 14,624 13,391 ------- ------- -------
$168,542 $315,942 $304,958 ======= ======= =======
Accounts payable - operations includes approximately $113,000 and $115,000 due NTS Development Company at December 31, 1995 and 1994, respectively.
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Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.

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 54) 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).
Richard L. Good - ---------------
Mr. Good (age 56) President and Chief Operating Officer of NTS Corporation, President of NTS Development Company and Chairman of the Board of NTS Securities, Inc., joined the Manager in January 1985. From 1981 through 1984, he was Executive Vice President of Jacques-Miller, Inc., a real estate syndication, property management and financial planning firm in Nashville, Tennessee.
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, Richard L. Good and John W. Hampton:
John W. Hampton - ---------------
Mr. Hampton (age 46) is Senior Vice President of NTS Corporation with responsibility for all accounting operations. Before joining NTS in March 1991, Mr. Hampton was Vice President - Finance and Chief Financial Officer of the Sturgeon-Thornton-Marrett Development Company in Louisville, Kentucky for nine years. Prior to that he was with Alexander Grant & Company CPA's. Mr. Hampton is a Certified Public Accountant and a graduate of the University of Louisville with a Bachelor of Science degree in Commerce. He is a member of the American Institute of CPA's and the Kentucky Society of CPA's.
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Item 11.

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 specified projects. NTS Development Company provides certain other services to the Partnerships. See Note 8 to the financial statements which sets forth transactions with NTS Development Company for the years ended December 31, 1995, 1994 and 1993.
The general partner is entitled to receive cash distributions and allocations of profits and losses from the Partnership. See Note 1C to the financial statements which describes the methods used to determine income allocations and cash distributions.
Item 12.

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 10172 Linn Station Road 30.10% Louisville, Kentucky 40223
NTS Capital Corporation 10172 Linn Station Road 9.95% Louisville, Kentucky 40223
Richard L. Good 10.00% 10172 Linn Station Road Louisville, Kentucky 40223
The remaining 49.95% interests are owned by various limited partners of NTS-Properties Plus Associates.
Item 13.

Item 13. Certain Relationships and Related Transactions
Property management fees of $59,849 (1995), $180,332 (1994) and $181,000 (1993) 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 permitted by the partnership agreement, NTS Development Company will receive a repair and maintenance fee equal to 5.9% of costs incurred which relate to capital improvements. The Partnership has incurred $6,446 and $21,607 as a repair and maintenance fee during the year ended December 31, 1995 and 1994, respectively, and has capitalized this cost as part of land, buildings and amenities.
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Item 13. Certain Relationships and Related Transactions - Continued
As permitted by the partnership agreement, the Partnership was also charged the following amounts from NTS Development Company for the years ended December 31, 1995, 1994 and 1993. 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:
1995 1994 1993 -------- -------- --------
Administrative $110,191 $125,031 $120,181 Leasing 17,194 60,213 56,158 Property manager 38,675 116,074 115,228 Other 2,482 14,624 13,391 ------- ------- -------
$168,542 $315,942 $304,958 ======= ======= =======
Accounts payable - operations includes approximately $113,000 and $115,000 due NTS Development at December 31, 1995 and 1994, respectively.
There are no other agreements or relationships between the Partnership, the General Partner and its affiliates than those previously described.
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PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
1. Financial statements
The financial statements for the years ended December 31, 1995, 1994 and 1993, together with the report of Arthur Andersen LLP dated February 14, 1996 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
There were no reports on Form 8-K for the quarter ended December 31, 1995.
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SIGNATURES ----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities exchange Act of 1934, NTS-Properties Plus Ltd. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NTS-PROPERTIES PLUS LTD. . (Registrant)
BY: NTS-Properties Plus Associates, BY: NTS Capital Corporation, General Partner
/s/ John W. Hampton John W. Hampton Senior Vice President
Date: March 28 , 1996
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 J. D. Nichols Associates and Chairman of the Board and Sole Director of NTS Capital Corporation
/s/ Richard L. Good General Partner of NTS-Properties Plus Richard L. Good Associates and President of NTS Capital Corporation
/s/ John W. Hampton Senior Vice President of NTS Capital John W. Hampton Corporation
The Partnership is a limited partnership and no proxy material has been sent to the limited partners.
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