Attached files
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EXCEL - IDEA: XBRL DOCUMENT - NTS REALTY HOLDINGS LP | Financial_Report.xls |
EX-31.1 - EX-31.1 - NTS REALTY HOLDINGS LP | a12-8711_1ex31d1.htm |
EX-32.2 - EX-32.2 - NTS REALTY HOLDINGS LP | a12-8711_1ex32d2.htm |
EX-32.1 - EX-32.1 - NTS REALTY HOLDINGS LP | a12-8711_1ex32d1.htm |
EX-31.2 - EX-31.2 - NTS REALTY HOLDINGS LP | a12-8711_1ex31d2.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2012
OR
o 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 001-32389
NTS REALTY HOLDINGS LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware |
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41-2111139 |
(State or other jurisdiction of incorporation or |
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(I.R.S. Employer Identification No.) |
organization) |
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10172 Linn Station Road Louisville, Kentucky |
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40223 |
(Address of principal executive offices) |
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(Zip Code) |
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(502) 426-4800 | ||
(Registrants telephone number, including area code) | ||
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Not applicable | ||
(Former name, former address and former fiscal year, if changed since last report) |
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 o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer o |
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Accelerated filer o |
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Non-accelerated filer o |
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Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
APPLICABLE ONLY TO CORPORATE ISSUERS
As of May 9, 2012, there were 11,095,274 of the registrants limited partnership units outstanding.
NTS REALTY HOLDINGS LIMITED PARTNERSHIP
FORM 10-Q
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements included in this Quarterly Report on Form 10-Q, particularly those included in Part I, Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A), constitute forward-looking statements. These forward-looking statements include discussion and analysis of our financial condition, including our ability to rent space on favorable terms, our ability to address debt maturities and fund our liquidity requirements, the value of our assets, our anticipated capital expenditures, the amount and timing of anticipated future cash distributions to our unit holders and other matters. Words such as may, anticipates, expects, intends, plans, believes, seeks, estimates, would, could, should, and variations of these words and similar expressions are intended to identify forward-looking statements and indicate that it is possible that the event may not occur. If these events do not occur, the result which we expected also may or may not occur in a different manner, which may be more or less favorable to us. We do not undertake any obligation to update these forward-looking statements.
Any forward-looking statements included in MD&A, or elsewhere in this report, are not historical facts, but reflect the intent, belief or current expectations of our managing general partner based on its knowledge and understanding of the business and industry, the economy and other future conditions only as of the date of this report and may ultimately prove to be incorrect or false. These statements are not guarantees of future performance, and we caution unit holders not to place undue reliance on forward-looking statements. Actual results could differ materially from those expressed or forecast in any forward-looking statements as a result of a number of factors, including, but not limited to, the factors listed and described under Risk Factors in our filings with the Securities and Exchange Commission (the SEC), particularly our most recent Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the SEC on March 23, 2012, which are incorporated herein by reference.
PART I FINANCIAL INFORMATION
NTS REALTY HOLDINGS LIMITED PARTNERSHIP
Condensed Consolidated Balance Sheets as of March 31, 2012 (Unaudited) and December 31, 2011
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(Unaudited) |
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March 31, 2012 |
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December 31, 2011 |
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ASSETS: |
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Cash and equivalents |
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$ |
1,257,323 |
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$ |
1,165,137 |
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Cash and equivalents - restricted |
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2,591,513 |
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2,421,608 |
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Accounts receivable, net of allowance for doubtful accounts of $142,215 at March 31, 2012 and $214,585 at December 31, 2011, respectively |
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1,665,220 |
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1,712,390 |
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Land, buildings and amenities, net |
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296,773,102 |
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300,235,083 |
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Investment in and advances to joint venture |
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3,188,900 |
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2,594,879 |
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Investment in and advances to tenant in common |
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493,501 |
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706,771 |
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Other assets |
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4,394,905 |
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5,544,842 |
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Total assets |
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$ |
310,364,464 |
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$ |
314,380,710 |
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LIABILITIES: |
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Mortgages and notes payable |
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$ |
264,066,083 |
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$ |
263,584,959 |
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Accounts payable and accrued expenses |
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3,449,543 |
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4,575,502 |
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Accounts payable and accrued expenses due to affiliate |
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453,179 |
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372,934 |
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Distributions payable |
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554,764 |
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554,764 |
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Security deposits |
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950,499 |
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936,804 |
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Other liabilities |
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4,210,431 |
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4,273,457 |
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Investment in and advances to tenant in common |
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870,318 |
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669,803 |
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Total liabilities |
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274,554,817 |
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274,968,223 |
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COMMITMENTS AND CONTINGENCIES (NOTE 13) |
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EQUITY: |
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Partners equity |
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29,053,331 |
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32,335,426 |
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Noncontrolling interests |
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6,756,316 |
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7,077,061 |
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Total equity |
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35,809,647 |
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39,412,487 |
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Total liabilities and equity |
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$ |
310,364,464 |
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$ |
314,380,710 |
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NTS REALTY HOLDINGS LIMITED PARTNERSHIP
Condensed Consolidated Statement of Equity (1) as of March 31, 2012
(Unaudited)
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(Unaudited) |
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General |
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Limited |
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General |
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Limited |
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Noncontrolling |
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Total |
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EQUITY: |
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Initial equity |
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714,491 |
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10,667,117 |
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$ |
3,131,381 |
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$ |
46,750,444 |
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$ |
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$ |
49,881,825 |
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Contributions from noncontrolling interests |
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9,952,176 |
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9,952,176 |
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Net income (loss) prior years |
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619,835 |
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9,437,406 |
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(2,532,115 |
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7,525,126 |
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Consolidated net loss current year |
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(175,629 |
) |
(2,551,702 |
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(294,245 |
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(3,021,576 |
) | ||||
Cash distributions declared to date |
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(1,686,199 |
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(25,116,146 |
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(369,500 |
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(27,171,845 |
) | ||||
Retirement of limited partnership interests to date |
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(286,334 |
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(1,356,059 |
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(1,356,059 |
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Balances on March 31, 2012 |
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714,491 |
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10,380,783 |
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$ |
1,889,388 |
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$ |
27,163,943 |
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$ |
6,756,316 |
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$ |
35,809,647 |
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The accompanying notes to condensed consolidated 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, Accounting Standards Codification Topic 220 Comprehensive Income.
NTS REALTY HOLDINGS LIMITED PARTNERSHIP
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2012 and 2011
(Unaudited)
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(Unaudited) |
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Three Months Ended |
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2012 |
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2011 |
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REVENUE: |
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Rental income |
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$ |
13,582,404 |
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$ |
12,808,580 |
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Tenant reimbursements |
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459,124 |
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440,027 |
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Total revenue |
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14,041,528 |
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13,248,607 |
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EXPENSES: |
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Operating expenses |
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3,782,923 |
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3,554,839 |
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Operating expenses reimbursed to affiliate |
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1,544,296 |
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1,430,264 |
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Management fees |
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701,173 |
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664,981 |
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Property taxes and insurance |
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1,836,917 |
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1,850,872 |
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Professional and administrative expenses |
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251,741 |
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252,567 |
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Professional and administrative expenses reimbursed to affiliate |
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436,714 |
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426,744 |
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Depreciation and amortization |
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4,428,491 |
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4,785,850 |
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Total expenses |
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12,982,255 |
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12,966,117 |
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OPERATING INCOME |
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1,059,273 |
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282,490 |
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Interest and other income |
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19,796 |
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195,100 |
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Interest expense |
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(3,496,536 |
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(3,534,280 |
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Loss on disposal of assets |
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(98,345 |
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(31,096 |
) | ||
Loss from investment in joint venture |
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(91,979 |
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(425 |
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Loss from investments in tenants in common |
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(413,785 |
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(412,467 |
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CONSOLIDATED NET LOSS |
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(3,021,576 |
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(3,500,678 |
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Net loss attributable to noncontrolling interests |
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(294,245 |
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(108,662 |
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NET LOSS |
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$ |
(2,727,331 |
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$ |
(3,392,016 |
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Loss from continuing operations allocated to limited partners |
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$ |
(2,826,999 |
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$ |
(3,280,903 |
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Net loss attributable to noncontrolling interests allocated to limited partners |
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(275,297 |
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(101,840 |
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NET LOSS ALLOCATED TO LIMITED PARTNERS |
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$ |
(2,551,702 |
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$ |
(3,179,063 |
) |
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Loss from continuing operations per limited partnership unit |
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$ |
(0.27 |
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$ |
(0.31 |
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Net loss attributable to noncontrolling interests per limited partnership unit |
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(0.03 |
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(0.01 |
) | ||
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NET LOSS PER LIMITED PARTNERSHIP UNIT |
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$ |
(0.24 |
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$ |
(0.30 |
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Weighted average number of limited partnership interests |
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10,380,783 |
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10,666,269 |
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The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
NTS REALTY HOLDINGS LIMITED PARTNERSHIP
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011
(Unaudited)
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(Unaudited) |
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2012 |
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2011 |
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OPERATING ACTIVITIES: |
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Consolidated net loss |
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$ |
(3,021,576 |
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$ |
(3,500,678 |
) |
Adjustments to reconcile consolidated net loss to net cash provided by operating activities: |
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Loss on disposal of assets |
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98,345 |
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31,096 |
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Depreciation and amortization |
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4,608,916 |
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5,104,247 |
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Loss from investment in joint venture |
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91,979 |
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425 |
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Loss from investments in tenants in common |
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413,785 |
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412,467 |
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Changes in assets and liabilities: |
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Cash and equivalents restricted |
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(169,905 |
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15,532 |
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Accounts receivable |
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47,170 |
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87,198 |
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Other assets |
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961,124 |
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(576,458 |
) | ||
Accounts payable and accrued expenses |
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(1,125,959 |
) |
(37,583 |
) | ||
Accounts payable and accrued expenses due to affiliate |
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80,245 |
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67,509 |
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Security deposits |
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13,695 |
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42,103 |
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Other liabilities |
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(63,026 |
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(2,544 |
) | ||
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Net cash provided by operating activities |
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1,934,793 |
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1,643,314 |
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INVESTING ACTIVITIES: |
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Additions to land, buildings and amenities |
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(1,056,467 |
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(1,268,134 |
) | ||
Investment in joint venture |
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(686,000 |
) |
(308,700 |
) | ||
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Net cash used in investing activities |
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(1,742,467 |
) |
(1,576,834 |
) | ||
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FINANCING ACTIVITIES: |
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Distributions to noncontrolling interest holders |
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(26,500 |
) |
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Revolving notes payable, net |
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1,497,688 |
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1,809,987 |
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Principal payments on mortgages payable |
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(1,016,564 |
) |
(770,508 |
) | ||
Additions to loan costs |
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(25,000 |
) | ||
Cash distributions |
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(554,764 |
) |
(569,038 |
) | ||
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Net cash (used in) provided by financing activities |
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(100,140 |
) |
445,441 |
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NET INCREASE IN CASH AND EQUIVALENTS |
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92,186 |
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511,921 |
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CASH AND EQUIVALENTS, beginning of period |
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1,165,137 |
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180,053 |
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CASH AND EQUIVALENTS, end of period |
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$ |
1,257,323 |
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$ |
691,974 |
|
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
NTS REALTY HOLDINGS LIMITED PARTNERSHIP
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The unaudited condensed consolidated financial statements included herein should be read in conjunction with NTS Realty Holdings Limited Partnerships (NTS Realty) 2011 annual report on Form 10-K as filed with the Securities and Exchange Commission on March 23, 2012. The Condensed Consolidated Balance Sheet as of December 31, 2011, has been derived from the audited consolidated financial statements of NTS Realty as of that date. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. In the opinion of NTS Realty Capital, Inc., our managing general partner, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation, have been made to the accompanying unaudited condensed consolidated financial statements for the three months ended March 31, 2012 and 2011. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period. As used in this quarterly report on Form 10-Q, the terms we, us, or our, as the context requires, may refer to NTS Realty, its wholly-owned properties, properties held by wholly-owned subsidiaries, its interests in consolidated and unconsolidated joint venture investments or interests in properties held as a tenant in common with an unaffiliated third party.
Note 1 Summary of Significant Accounting Policies
Organization and Distribution Policy
We are in the business of developing, constructing, owning and operating multifamily properties, commercial and retail real estate. As of March 31, 2012, we owned 24 properties, comprised of 15 multifamily properties, 7 commercial properties and 2 retail properties. The properties are located in and around Louisville (7) and Lexington (1), Kentucky; Fort Lauderdale (3) and Orlando (3), Florida; Indianapolis (4), Indiana; Memphis (1) and Nashville (2), Tennessee; Richmond (2), Virginia; and Atlanta (1), Georgia. Our commercial properties aggregate approximately 733,000 square feet, which includes 125,000 square feet at our property held as a joint venture with an unaffiliated third party, and our retail properties contain approximately 47,000 square feet. We own multifamily properties containing 4,393 rental units, which include 686 rental units at our properties held as a tenant in common with an unaffiliated third party.
We pay distributions if and when authorized by our managing general partner using proceeds from advances drawn on our revolving note payable to a bank. We are required to pay distributions on a quarterly basis of an amount no less than sixty-five percent (65%) of our net cash flow from operations as this term is defined in regulations promulgated by the Treasury Department under the Internal Revenue Code of 1986, as amended; provided that if a law is enacted or existing law is modified or interpreted in a manner that subjects us to taxation as a corporation or otherwise subjects us to entity level taxation for federal, state or local income tax purposes, we will adjust the amount distributed to reflect our obligation to pay tax. Any distribution other than a distribution with respect to the final quarter of a calendar year shall be made no later than forty-five (45) days after the last day of such quarter based on our estimate of net cash flow from operations for the year. Any distribution with respect to the final quarter of a calendar year shall be made no later than ninety (90) days after the last day of such quarter based on actual net cash flow from operations for the year, adjusted for any excess or insufficient distributions made with respect to the first three quarters of the calendar year.
Net cash flow from operations may be reduced by the amount of reserves as determined by us each quarter. NTS Realty Capital may establish these reserves for, among other things, working capital or capital improvement needs. Therefore, there is no assurance that we will have net cash flow from operations from which to pay distributions in the future. For example, our partnership agreement permits our managing general partner to reinvest sales or refinancing proceeds in new and existing properties or to create reserves to fund future capital expenditures. Because net cash flow from operations is calculated after reinvesting sales or refinancing proceeds or establishing reserves, we may not have any net cash flow from operations from which to pay distributions.
We paid a quarterly distribution of $0.05 per unit to limited partners on April 13, 2012.
Basis of Presentation
The unaudited condensed consolidated financial statements include the accounts of all wholly-owned properties and properties that are less than wholly-owned, but which we control or for which we are the primary
beneficiary. We consolidate a variable interest entity, or VIE, when we are determined to be the primary beneficiary based on the qualitative factors affecting:
· Our power to direct the activities of a variable interest entity that most significantly affect the variable interest entitys economic performance; and
· Our obligation to absorb losses of the variable interest entity that could potentially be significant to the variable interest entity or the right to receive benefits from the variable interest entity that could potentially be significant to the variable interest entity.
Our determination of the primary beneficiary of a VIE considers all relationships between us and the VIE, including management agreements and other contractual arrangements, when determining the party with the controlling financial interest, as defined, by accounting standards. Effective January 1, 2010, we adopted the provisions of Accounting Standards Update No. 2009-17 Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (ASU 2009-17), which amends the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 810 Consolidation (FASB ASC Topic 810). The amendment to FASB ASC Topic 810 revises the consolidation guidance for VIEs, focusing on a qualitative evaluation of the conditions subjecting the entity to consolidation. There have been no changes during 2012 in conclusions about whether an entity qualifies as a VIE or whether we are the primary beneficiary of any previously identified VIE. During the three months ended March 31, 2012, we did not provide financial or other support to a previously identified VIE that we were not previously contractually obligated to provide. Our unconsolidated joint venture interest and our properties owned as a tenant in common with an unaffiliated third party are accounted for under the equity method. Intercompany transactions and balances have been eliminated.
On October 28, 2010, we entered into a joint venture investment agreement with an unaffiliated third party to invest in a commercial office building located in Louisville, Kentucky, totaling approximately 125,000 square feet. The building, known as 600 North Hurstbourne, was developed by our affiliate, NTS Development Company. This joint venture, Campus One, LLC, is a variable interest entity. We are not the primary beneficiary. NTS Corporation through its subsidiaries, NTS Development Company and NTS Management Company, holds the right to receive significant benefits through its agreement as developer and manager, respectively. NTS Development Company is responsible for the development of the building on time and within budget. The development fee for these services is 2% of the projected costs, not exceeding $400,000. NTS Management Company is responsible for leasing and managing the building and is entitled to earn leasing commissions, management fees, construction management fees, asset management fees and a disposition fee for its services. Our interest in this variable interest entity is accounted for using the equity method. Our ownership interest is reflected as investment in and advances to joint venture on our condensed consolidated balance sheets as of March 31, 2012 and December 31, 2011 at $3.2 million and $2.6 million, respectively.
Fair Value of Financial Instruments
FASB ASC Topic 820 Fair Value Measurements and Disclosures requires companies to determine fair value based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. FASB ASC Topic 820 emphasizes that fair value is a market-based measurement, not an entity specific measurement.
FASB ASC Topic 820 requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:
· Level 1: Quoted market prices in active markets for identical assets or liabilities.
· Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
· Level 3: Unobservable inputs that are not corroborated by market data.
We did not have any material financial assets or liabilities that are required to be recorded at fair value as of March 31, 2012 or December 31, 2011.
Financial Instruments
FASB ASC Topic 825 Financial Instruments requires disclosures about fair value of financial instruments in both interim and annual financial statements.
Certain of our assets and liabilities are considered financial instruments. Fair value estimates, methods and assumptions are set forth below.
The book values of cash and equivalents, trade receivables and trade payables are considered representative of their respective fair values because of the immediate or short-term maturity of these financial instruments.
Cash and equivalents and cash and equivalents restricted: The carrying amount of these assets and liabilities approximates fair value as of March 31, 2012 and December 31, 2011, due to the short-term nature of such accounts.
Deferred Compensation Plans: Our Officer and Director Plans as of March 31, 2012 and December 31, 2011 reflected liabilities of approximately $0.4 million and $0.4 million, respectively, the fair market value of 118,594 and 113,091 units, respectively, and are included in our other liabilities using level 1 measurement. Compensation expense for the Officer and Director Plans for the three months ended March 31, 2012 and 2011 totaled approximately $46,000 and ($7,000) respectively. The income item resulted from a fluctuation in the fair market value of the respective units.
Mortgages and notes payable: As of March 31, 2012 and December 31, 2011, we determined the estimated fair values of our mortgages and notes payable were approximately $285.0 million and $283.0 million, respectively, by discounting expected future cash payments utilizing a discount rate equivalent to the rate at which similar instruments would be originated at the reporting date.
Noncontrolling interests: Pluris Property Fund I, L.P. (PPFI), our joint venture partner, owns a 49% noncontrolling interest in Golf Brook Apartments and Sabal Park Apartments. Pluris Property Fund II, L.P. (PPFII), our joint venture partner, owns a 26.5% noncontrolling interest in Lakes Edge Apartments. PPFI and PPFII are related parties as the son-in-law of our President and CEO, Brian F. Lavin, is a member of the general partner of each of PPFI and PPFII.
Note 2 Use of Estimates and Reclassifications in the Preparation of Financial Statements
The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires us 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. We made certain reclassifications of prior period amounts in the consolidated financial statements to conform to the 2012 presentation. These reclassifications had no impact on previously reported net loss attributable to unit holders or net loss per limited partnership unit.
Note 3 Real Estate Transactions
Acquisitions
FASB ASC Topic 805 Business Combinations requires the acquiring entity in a business combination to measure the assets acquired, liabilities assumed (including contingencies) and any noncontrolling interests at their fair values on the acquisition date. The statement also requires that acquisition-related transaction costs be expensed
as incurred and acquired research and development value be capitalized. In addition, acquisition-related restructuring costs are to be capitalized.
Upon acquisition of wholly-owned properties or joint venture investments that are less than wholly-owned, but which we control or for which we are the primary beneficiary, the assets and liabilities purchased are recorded at their fair market value at the date of the acquisition using the acquisition method in accordance with FASB ASC Topic 805 Business Combinations. We recognize the net tangible and identified intangible assets for each of the properties acquired based on fair values (including land, buildings, tenant improvements, acquired above and below market leases and the origination cost of acquired in-place leases) and acquired liabilities. The intangible assets recorded are amortized over the weighted average lease lives. We identify any above or below market leases or customer relationship intangibles that exist at the acquisition date. We recognize mortgages and other liabilities at fair market value at the date of the acquisition. We utilize an independent appraiser to assess fair value based on estimated cash flow projections for the tangible assets acquired that utilize discount and capitalization rates deemed appropriate and available market information. We expense acquisition costs as incurred.
FASB ASC Topic 360 Property, Plant, and Equipment specifies circumstances in which certain long-lived assets must be reviewed for impairment. If the carrying amount of an asset exceeds the sum of its expected future cash flows, the assets carrying value must be written down to fair value. In determining the value of an investment property and whether the investment property is impaired, management considers several factors such as projected rental and vacancy rates, property operating expenses, capital expenditures and interest rates. The capitalization rate used to determine property valuation is based on the market in which the investment property is located, length of leases, tenant financial strength, the economy in general, demographics, environment, property location, visibility, age and physical condition among others. All of these factors are considered by management in determining the value of any particular investment property. The value of any particular investment property is sensitive to the actual results of any of these factors, either individually or taken as a whole. If the actual results differ from managements judgment, the valuation could be negatively or positively affected. Application of this standard for the three months ended March 31, 2012 and 2011, did not result in an impairment loss.
During the three months ended March 31, 2012 and 2011, we did not acquire any properties.
Dispositions
During the three months ended March 31, 2012 and 2011, we did not dispose of any properties.
Note 4 Concentration of Credit Risk
We own and operate wholly, as a tenant in common with an unaffiliated third party or through joint venture investments with both affiliated and unaffiliated third parties, multifamily, commercial and retail properties in Louisville and Lexington, Kentucky; Fort Lauderdale and Orlando, Florida; Indianapolis, Indiana; Memphis and Nashville, Tennessee; Richmond, Virginia; and Atlanta, Georgia.
Our financial instruments that are exposed to concentrations of credit risk consist of cash and equivalents and cash and equivalents - restricted. We maintain our cash accounts primarily with banks located in Kentucky.
Note 5 Cash and Equivalents
Cash and equivalents include cash on hand and short-term, highly liquid investments with initial maturities of three months or less. We have a cash management program, which provides for the overnight investment of excess cash balances. Under an agreement with a bank, excess cash is invested in a mutual fund for U.S. government and agency securities each night.
Note 6 Cash and Equivalents - Restricted
Cash and equivalents - restricted represents cash on hand and short-term, highly liquid investments with initial maturities of three months or less which have been escrowed with certain mortgage companies and banks for property taxes, insurance and tenant improvements in accordance with certain loan and lease agreements and certain security deposits.
Note 7 Property and Depreciation
Land, buildings and amenities are stated at cost. 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 generally 5-30 years for land improvements, 7-30 years for buildings and improvements and 5-30 years for amenities. Tenant improvements are generally depreciated over the life of the initial or renewal term of the respective tenant lease. Depreciation expense from continuing operations for the three months ended March 31, 2012 and 2011 was approximately $4.4 million and $4.7 million, respectively.
Note 8 Investment in and Advances to Joint Venture
We own a joint venture interest in and operate the following property:
· 600 North Hurstbourne: 125,000 square foot office building in Louisville, Kentucky. We are obligated to contribute $4.9 million, for a 49% interest as a joint venture with an unaffiliated third party. At March 31, 2012 we had funded $3.3 million of this commitment.
Presented below are the summarized balance sheets and statements of operations for this property:
|
|
(Unaudited) |
| ||||
|
|
March 31, 2012 |
|
December 31, 2011 |
| ||
Summarized Balance Sheet |
|
|
|
|
| ||
Land, buildings and amenities, net |
|
$ |
14,360,570 |
|
$ |
11,415,364 |
|
Other, net |
|
1,540,616 |
|
1,346,651 |
| ||
Total assets |
|
$ |
15,901,186 |
|
$ |
12,762,015 |
|
|
|
|
|
|
| ||
Mortgage payable and other liabilities |
|
$ |
9,393,226 |
|
$ |
7,466,343 |
|
Equity |
|
6,507,960 |
|
5,295,672 |
| ||
Total liabilities and equity |
|
15,901,186 |
|
12,762,015 |
|
|
|
(Unaudited) |
| ||||
|
|
Three Months Ended March 31, |
| ||||
|
|
2012 |
|
2011 |
| ||
Summarized Statements of Operations |
|
|
|
|
| ||
Revenue |
|
$ |
45,251 |
|
$ |
|
|
|
|
|
|
|
| ||
Operating loss |
|
$ |
(165,757 |
) |
$ |
(867 |
) |
|
|
|
|
|
| ||
Net loss |
|
$ |
(187,712 |
) |
$ |
(867 |
) |
|
|
|
|
|
| ||
Net loss attributable to noncontrolling interest |
|
(91,979 |
) |
(425 |
) | ||
|
|
|
|
|
| ||
Net loss |
|
$ |
(95,733 |
) |
$ |
(442 |
) |
Note 9 Investment in and Advances to Tenants in Common
We own a tenant in common interest in and operate the following properties:
· The Overlook at St. Thomas Apartments: 484-unit luxury apartment complex in Louisville, Kentucky. We own a 60% interest as a tenant in common with an unaffiliated third party.
· Creeks Edge at Stony Point Apartments: 202-unit luxury apartment complex in Richmond, Virginia. We own a 51% interest as a tenant in common with an unaffiliated third party.
Presented below are the summarized balance sheets and statements of operations for these properties:
|
|
(Unaudited) |
| ||||
|
|
March 31, 2012 |
|
December 31, 2011 |
| ||
Summarized Balance Sheet |
|
|
|
|
| ||
Land, buildings and amenities, net |
|
$ |
55,942,747 |
|
$ |
57,105,260 |
|
Other, net |
|
1,977,102 |
|
1,599,600 |
| ||
Total assets |
|
$ |
57,919,849 |
|
$ |
58,704,860 |
|
|
|
|
|
|
| ||
Mortgage payable and other liabilities |
|
$ |
56,554,002 |
|
$ |
56,586,644 |
|
Equity |
|
1,365,847 |
|
2,118,216 |
| ||
Total liabilities and equity |
|
57,919,849 |
|
58,704,860 |
|
|
|
(Unaudited) |
| ||||
|
|
Three Months Ended March 31, |
| ||||
|
|
2012 |
|
2011 |
| ||
Summarized Statements of Operations |
|
|
|
|
| ||
Revenue |
|
$ |
2,335,053 |
|
$ |
2,201,833 |
|
|
|
|
|
|
| ||
Operating loss |
|
$ |
75,457 |
|
$ |
77,552 |
|
|
|
|
|
|
| ||
Consolidated net loss |
|
$ |
(752,368 |
) |
$ |
(757,313 |
) |
|
|
|
|
|
| ||
Net loss attributable to noncontrolling interest |
|
(338,583 |
) |
(344,846 |
) | ||
|
|
|
|
|
| ||
Net loss |
|
$ |
(413,785 |
) |
$ |
(412,467 |
) |
|
|
|
|
|
| ||
Distributions |
|
|
|
|
| ||
|
|
|
|
|
| ||
The Overlook at St. Thomas Apartments |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
| ||
Creeks Edge at Stony Point |
|
$ |
|
|
$ |
|
|
The continuing net losses of The Overlook at St. Thomas Apartments have reduced our investment to zero. We have recognized the losses in excess of our investment and recorded the resulting liability on our condensed consolidated balance sheets.
Note 10 Mortgages and Notes Payable
Mortgages and notes payable consist of the following:
|
|
(Unaudited) |
|
|
| ||
|
|
March 31, 2012 |
|
December 31, 2011 |
| ||
Revolving note payable to a bank for $10.0 million, with interest payable in monthly installments at a variable rate based on LIBOR one-month rate plus 2.50%, currently 2.74%, due September 30, 2012 |
|
$ |
4,639,818 |
|
$ |
3,142,131 |
|
|
|
|
|
|
| ||
Note payable to an insurance company in monthly installments of principal and interest, bearing fixed interest at 2.79%, maturing October 28, 2012 |
|
74,439 |
|
105,960 |
| ||
|
|
|
|
|
| ||
Mortgage payable to a bank in monthly installments of principal and interest, bearing interest at a variable rate based on LIBOR one-month rate plus 3.50%, currently 3.74%, due September 1, 2014, secured by certain land, buildings and amenities with a carrying value of $17,070,649. The mortgage is guaranteed by Mr. Nichols and Mr. Lavin |
|
20,520,602 |
|
20,628,602 |
| ||
|
|
|
|
|
| ||
Mortgage payable to an insurance company in monthly installments of principal and interest, bearing fixed interest at 8.45%, maturing November 1, 2015, secured by certain land, buildings and amenities with a carrying value of $1,691,827 |
|
1,370,370 |
|
1,449,288 |
| ||
|
|
|
|
|
| ||
Mortgage payable to Federal Home Loan Mortgage Corporation in monthly installments of principal and interest, bearing fixed interest at 5.11%, maturing December 1, 2014, secured by certain land, buildings and amenities with a carrying value of $10,322,588 |
|
10,906,227 |
|
10,962,165 |
| ||
|
|
|
|
|
| ||
Mortgage payable to a bank in monthly installments of principal and interest, bearing fixed interest at 6.03%, maturing September 1, 2018, secured by certain land, buildings and amenities with a carrying value of $31,809,426 |
|
26,178,967 |
|
26,254,275 |
| ||
|
|
|
|
|
| ||
Mortgage payable to Federal Home Loan Mortgage Corporation in monthly installments of principal and interest, bearing interest at a variable rate based on LIBOR one-month rate plus 3.33%, currently 3.57%, maturing July 1, 2016, secured by certain land, buildings and amenities with a carrying value of $17,174,883 |
|
14,446,904 |
|
14,514,457 |
| ||
|
|
|
|
|
| ||
Mortgage payable to Federal Home Loan Mortgage Corporation in monthly installments of principal and interest, bearing interest at a variable rate based on LIBOR one-month rate plus 3.50%, currently 3.74%, maturing July 1, 2016, secured by certain land, buildings and amenities with a carrying value of $11,224,351 |
|
9,486,773 |
|
9,529,772 |
| ||
|
|
|
|
|
| ||
Mortgage payable to Federal Home Loan Mortgage Corporation in monthly installments of principal and interest, bearing fixed interest at 5.40%, maturing January 1, 2020, secured by certain land, buildings and amenities with a carrying value of $18,798,717 |
|
13,490,226 |
|
13,539,685 |
| ||
|
|
|
|
|
| ||
Mortgage payable to Federal Home Loan Mortgage Corporation in monthly installments of principal and interest, bearing fixed interest at 5.40%, maturing January 1, 2020, secured by certain land, buildings and amenities with a carrying value of $33,319,907 |
|
26,213,465 |
|
26,309,571 |
| ||
|
|
|
|
|
| ||
Mortgage payable to Federal Home Loan Mortgage Corporation in monthly installments of principal and interest, bearing fixed interest at 5.40%, maturing January 1, 2020, secured by certain land, buildings and amenities with a carrying value of $18,154,263 |
|
16,354,290 |
|
16,414,249 |
| ||
|
|
|
|
|
| ||
Mortgage payable to Federal Home Loan Mortgage Corporation in monthly installments of principal and interest, bearing fixed interest at 5.40%, maturing January 1, 2020, secured by certain land, buildings and amenities with a carrying value of $32,403,142 |
|
26,868,802 |
|
26,967,310 |
| ||
|
|
|
|
|
| ||
Mortgage payable to Federal Home Loan Mortgage Corporation in monthly installments of principal and interest, bearing fixed interest at 5.40%, maturing January 1, 2020, secured by certain land, buildings and amenities with a carrying value of $16,085,681 |
|
11,058,199 |
|
11,098,741 |
| ||
|
|
|
|
|
| ||
Mortgage payable to Federal Home Loan Mortgage Corporation in monthly installments of principal and interest, bearing fixed interest at 5.40%, maturing January 1, 2020, secured by certain land, buildings and amenities with a carrying value of $21,253,822 |
|
29,732,865 |
|
29,841,874 |
| ||
|
|
|
|
|
| ||
Mortgage payable to Federal Home Loan Mortgage Corporation in monthly installments of principal and interest, bearing fixed interest at 5.40%, maturing January 1, 2020, secured by certain land, buildings and amenities with a carrying value of $9,115,525 |
|
10,626,162 |
|
10,665,120 |
| ||
|
|
Unaudited |
|
|
| ||
|
|
March 31, 2012 |
|
December 31, 2011 |
| ||
Mortgage payable to Federal Home Loan Mortgage Corporation in monthly installments of principal and interest, bearing fixed interest at 5.40%, maturing January 1, 2020, secured by certain land, buildings and amenities with a carrying value of $12,167,248 |
|
17,397,974 |
|
17,461,759 |
| ||
|
|
|
|
|
| ||
Mortgage payable to an insurance company, with interest payable in monthly installments until June 1, 2013, bearing fixed interest at 5.09%, maturing May 1, 2018, secured by certain land, buildings and amenities with a carrying value of $34,828,372 |
|
24,700,000 |
|
24,700,000 |
| ||
|
|
|
|
|
| ||
Total mortgages and notes payable |
|
$ |
264,066,083 |
|
$ |
263,584,959 |
|
Our $10.0 million revolving note payable to a bank is due September 30, 2012. As of March 31, 2012, our availability to draw on our revolving note payable was approximately $5.4 million.
Based on the borrowing rates currently available to us for loans with similar terms and average maturities, the fair value of our mortgages and notes payable on March 31, 2012 was approximately $285.0 million.
Interest paid for the three months ended March 31, 2012 and 2011 was approximately $3.4 million and $3.3 million, respectively.
Our mortgages may be prepaid but are generally subject to a yield-maintenance premium. Certain mortgages and notes payable contain covenants and requirements that we maintain specified debt limits and ratios related to our debt balances and property values. We complied with all covenants and requirements at March 31, 2012. We anticipate renewing or refinancing our mortgages and notes payable coming due within the next twelve months.
Mortgages payable for our unconsolidated tenants in common properties consist of the following:
|
|
(Unaudited) |
|
|
| ||
|
|
March 31, 2012 |
|
December 31, 2011 |
| ||
Mortgage payable to a bank in monthly installments of principal and interest, bearing fixed interest at 5.72%, maturing on April 11, 2017, secured by certain land, buildings and amenities with a carrying value of $32,458,307 (1) |
|
$ |
33,599,104 |
|
$ |
33,740,074 |
|
|
|
|
|
|
| ||
Mortgage payable to an insurance company in monthly installments of principal and interest, bearing fixed interest at 5.99%, maturing November 15, 2017, secured by certain land, buildings and amenities with a carrying value of $23,484,441 (2) |
|
$ |
22,069,923 |
|
$ |
22,147,406 |
|
(1) We are proportionately liable for this mortgage, limited to our 60% interest as a tenant in common.
(2) We are jointly and severally liable under this mortgage.
Based on the borrowing rates currently available to us for loans with similar terms and average maturities, the fair value of our mortgages payable for our unconsolidated tenants in common properties at March 31, 2012, was approximately $62.1 million.
Mortgage payable for our unconsolidated joint venture property consists of the following:
|
|
(Unaudited) |
|
|
| ||
|
|
March 31, 2012 |
|
December 31, 2011 |
| ||
Construction mortgage payable to a bank for $10.5 million with interest payable in monthly installments of interest, bearing a variable rate based on LIBOR one-month rate plus 2.40%, currently 2.64%, maturing December 14, 2014, secured by certain buildings and amenities with a carrying value of $14,360,570 (3) |
|
$ |
6,654,284 |
|
$ |
4,584,843 |
|
(3) We are a guarantor of this construction loan made to Campus One, LLC. We are proportionately liable for the $10.5 million obligation, limited to our 49% ownership interest.
Based on the borrowing rates currently available to us for loans with similar terms and average maturities, the fair value of our mortgage payable for our unconsolidated joint venture property at March 31, 2012, was approximately $6.7 million.
Note 11 Accounts Payable and Accrued Expenses Due to Affiliate
Accounts payable and accrued expenses due to affiliate includes amounts owed to NTS Development Company and/or its affiliate, NTS Management Company, collectively referred to as NTS Development, for reimbursement of salary and overhead expenses and fees for services rendered as provided for in our various management agreements.
Note 12 Related Party Transactions
Pursuant to our various management agreements, NTS Development receives fees for a variety of services performed for our benefit. NTS Development also receives fees under separate management agreements for each of our consolidated joint venture properties, our unconsolidated joint venture property, our properties owned as a tenant in common with an unaffiliated third party and our properties owned by our eight wholly-owned subsidiaries financed through Federal Home Loan Mortgage Corporation (FHLMC). Property management fees are paid in an amount equal to 5% of the gross collected revenue from our properties. This includes our wholly-owned properties, consolidated and unconsolidated joint venture properties and properties owned by our eight wholly-owned subsidiaries financed through FHLMC. Fees are paid in an amount equal to 3.5% of the gross collected revenue from our unconsolidated properties owned as a tenant in common with an unaffiliated third party. We were the beneficiary of a preferential ownership interest, disproportionately greater than our initial cash investment in each property owned as a tenant in common with an unaffiliated third party. Construction supervision fees are generally paid in an amount equal to 5% of the costs incurred which relate to capital improvements and significant repairs. NTS Development receives commercial leasing fees equal to 4% of the gross rental amount for new leases and 2% of the gross rental amount for new leases in which a broker is used and for renewals or extensions. Disposition fees are paid to NTS Development in an amount of 1% to 4% of the aggregate sales price of a property pursuant to our management agreements and up to a 6% fee upon disposition on our properties owned as a tenant in common with an unaffiliated third party under separate management agreements. NTS Development has agreed to accept a lower management fee for the properties we own as a tenant in common with an unaffiliated third party in exchange for a larger potential disposition fee. NTS Development is reimbursed its actual costs for services rendered to NTS Realty.
Employee costs are allocated among NTS Realty, other affiliates of our managing general partner and for the benefit of third parties, so that a full time employee can be shared by multiple entities. Each employees services, which are dedicated to a particular entitys operations, are allocated as a percentage of each employees costs to that entity. We only reimburse charges from NTS Development for actual costs of employee services incurred for our benefit.
We were charged the following amounts pursuant to our various agreements with NTS Development for the three months ended March 31, 2012 and 2011. These charges include items which have been expensed as operating expenses reimbursed to affiliate or professional and administrative expenses reimbursed to affiliate and items that have been capitalized as other assets or as land, buildings and amenities.
|
|
(Unaudited) |
| ||||
|
|
Three Months Ended March 31, |
| ||||
|
|
2012 |
|
2011 |
| ||
Property management fees |
|
$ |
701,000 |
|
$ |
665,000 |
|
|
|
|
|
|
| ||
Operating expenses reimbursement - property |
|
1,014,000 |
|
982,000 |
| ||
Operating expenses reimbursement - multifamily leasing |
|
209,000 |
|
175,000 |
| ||
Operating expenses reimbursement - administrative |
|
278,000 |
|
262,000 |
| ||
Operating expenses reimbursement - other |
|
43,000 |
|
11,000 |
| ||
|
|
|
|
|
| ||
Total operating expenses reimbursed to affiliate |
|
1,544,000 |
|
1,430,000 |
| ||
|
|
|
|
|
| ||
Professional and administrative expenses reimbursed to affiliate |
|
437,000 |
|
427,000 |
| ||
|
|
|
|
|
| ||
Construction supervision and leasing fees |
|
45,000 |
|
93,000 |
| ||
|
|
|
|
|
| ||
Total related party transactions |
|
$ |
2,727,000 |
|
$ |
2,615,000 |
|
|
|
|
|
|
| ||
Total related party transactions with our investment in tenants in common |
|
$ |
336,000 |
|
$ |
323,000 |
|
|
|
|
|
|
| ||
Total related party transactions with our investment in joint venture |
|
$ |
191,000 |
|
$ |
34,000 |
|
Property, multifamily leasing, administrative and other operating expenses reimbursed include employee costs charged to us by NTS Development and other actual costs incurred by NTS Development on our behalf, which were reimbursed by us.
During the three months ended March 31, 2012 and 2011, we were charged approximately $16,000 and $18,000, respectively, for property maintenance fees from affiliates of NTS Development.
NTS Development Company leased 20,368 square feet of office space in NTS Center at a rental rate of $14.50 per square foot and 1,902 square feet of storage space at a rental rate of $5.50 per square foot. We recognized rents of approximately $76,000 from NTS Development Company for each of the three months ended March 31, 2012 and 2011. The average per square foot rental rate for similar office space in NTS Center as of March 31, 2012 was $14.00 per square foot.
Note 13 Commitments and Contingencies
We, as an owner of real estate, are subject to various environmental laws of federal, state and local governments. Our compliance with existing laws has not had a material adverse effect on our financial condition, cash flows and results of operations. However, we cannot predict the impact of new or changed laws or regulations on our current properties or on properties that we may acquire in the future.
Litigation
From time to time, we are involved in litigation and other legal proceedings arising out of the ordinary course of business. There are no pending material legal proceedings to which we are subject that would have a material adverse affect on our financial condition, cash flows or results of operations.
Note 14 Segment Reporting
Our reportable operating segments include multifamily, commercial and retail real estate operations. The following unaudited financial information of the operating segments has been prepared using a management approach, which is consistent with the basis and manner in which our management internally disaggregates financial information for the purpose of assisting in making internal operating decisions. We evaluate performance based on stand-alone operating segment net income (loss). The non-segment information necessary to reconcile to our total operating results is included in the column labeled Partnership in the following information.
|
|
(Unaudited) |
| |||||||||||||
|
|
Three Months Ended March 31, 2012 |
| |||||||||||||
|
|
Multifamily |
|
Commercial |
|
Retail |
|
Partnership |
|
Total |
| |||||
Rental income |
|
$ |
12,003,185 |
|
$ |
1,452,903 |
|
$ |
132,090 |
|
$ |
(5,774 |
) |
$ |
13,582,404 |
|
Tenant reimbursements |
|
|
|
437,053 |
|
22,071 |
|
|
|
459,124 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total revenue |
|
12,003,185 |
|
1,889,956 |
|
154,161 |
|
(5,774 |
) |
14,041,528 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating expenses and operating expenses reimbursed to affiliate |
|
4,647,052 |
|
650,889 |
|
29,278 |
|
|
|
5,327,219 |
| |||||
Management fees |
|
594,254 |
|
98,357 |
|
8,562 |
|
|
|
701,173 |
| |||||
Property taxes and insurance |
|
1,572,745 |
|
220,058 |
|
14,941 |
|
29,173 |
|
1,836,917 |
| |||||
Professional and administrative expenses and professional and administrative expenses reimbursed to affiliate |
|
|
|
|
|
|
|
688,455 |
|
688,455 |
| |||||
Depreciation and amortization |
|
3,942,577 |
|
445,284 |
|
40,630 |
|
|
|
4,428,491 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total expenses |
|
10,756,628 |
|
1,414,588 |
|
93,411 |
|
717,628 |
|
12,982,255 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income (loss) |
|
1,246,557 |
|
475,368 |
|
60,750 |
|
(723,402 |
) |
1,059,273 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest and other income |
|
13,930 |
|
270 |
|
|
|
5,596 |
|
19,796 |
| |||||
Interest expense |
|
(3,245,980 |
) |
(150,279 |
) |
(11 |
) |
(100,266 |
) |
(3,496,536 |
) | |||||
Loss on disposal of assets |
|
(98,345 |
) |
|
|
|
|
|
|
(98,345 |
) | |||||
Loss from investment in joint venture |
|
|
|
(91,979 |
) |
|
|
|
|
(91,979 |
) | |||||
Loss from investments in tenants in common |
|
(413,785 |
) |
|
|
|
|
|
|
(413,785 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Consolidated net (loss) income |
|
(2,497,623 |
) |
233,380 |
|
60,739 |
|
(818,072 |
) |
(3,021,576 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss attributable to noncontrolling interests |
|
(294,245 |
) |
|
|
|
|
|
|
(294,245 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net (loss) income |
|
$ |
(2,203,378 |
) |
$ |
233,380 |
|
$ |
60,739 |
|
$ |
(818,072 |
) |
$ |
(2,727,331 |
) |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Land, buildings and amenities, net |
|
$ |
266,657,927 |
|
$ |
26,611,118 |
|
$ |
3,504,057 |
|
$ |
|
|
$ |
296,773,102 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Expenditures for land, buildings and amenities |
|
$ |
482,874 |
|
$ |
573,593 |
|
$ |
|
|
$ |
|
|
$ |
1,056,467 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Segment liabilities from continuing operations |
|
$ |
245,146,170 |
|
$ |
2,744,902 |
|
$ |
35,107 |
|
$ |
26,628,638 |
|
$ |
274,554,817 |
|
|
|
(Unaudited) |
| |||||||||||||
|
|
Three Months Ended March 31, 2011 |
| |||||||||||||
|
|
Multifamily |
|
Commercial |
|
Retail |
|
Partnership |
|
Total |
| |||||
Rental income |
|
$ |
11,283,896 |
|
$ |
1,392,254 |
|
$ |
141,333 |
|
$ |
(8,903 |
) |
$ |
12,808,580 |
|
Tenant reimbursements |
|
|
|
412,963 |
|
27,064 |
|
|
|
440,027 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total revenue |
|
11,283,896 |
|
1,805,217 |
|
168,397 |
|
(8,903 |
) |
13,248,607 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating expenses and operating expenses reimbursed to affiliate |
|
4,248,679 |
|
694,379 |
|
42,045 |
|
|
|
4,985,103 |
| |||||
Management fees |
|
566,029 |
|
90,425 |
|
8,527 |
|
|
|
664,981 |
| |||||
Property taxes and insurance |
|
1,563,127 |
|
245,434 |
|
13,137 |
|
29,174 |
|
1,850,872 |
| |||||
Professional and administrative expenses and professional and administrative expenses reimbursed to affiliate |
|
|
|
|
|
|
|
679,311 |
|
679,311 |
| |||||
Depreciation and amortization |
|
4,300,546 |
|
443,499 |
|
41,805 |
|
|
|
4,785,850 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total expenses |
|
10,678,381 |
|
1,473,737 |
|
105,514 |
|
708,485 |
|
12,966,117 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income (loss) |
|
605,515 |
|
331,480 |
|
62,883 |
|
(717,388 |
) |
282,490 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest and other income |
|
8,717 |
|
369 |
|
695 |
|
185,319 |
|
195,100 |
| |||||
Interest expense |
|
(3,319,912 |
) |
(145,483 |
) |
(12,376 |
) |
(56,509 |
) |
(3,534,280 |
) | |||||
Loss on disposal of assets |
|
(21,368 |
) |
(7,631 |
) |
(2,097 |
) |
|
|
(31,096 |
) | |||||
Loss from investment in joint venture |
|
|
|
(425 |
) |
|
|
|
|
(425 |
) | |||||
Loss from investments in tenants in common |
|
(412,467 |
) |
|
|
|
|
|
|
(412,467 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Consolidated net (loss) income |
|
(3,139,515 |
) |
178,310 |
|
49,105 |
|
(588,578 |
) |
(3,500,678 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss attributable to noncontrolling interests |
|
(108,662 |
) |
|
|
|
|
|
|
(108,662 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net (loss) income |
|
$ |
(3,030,853 |
) |
$ |
178,310 |
|
$ |
49,105 |
|
$ |
(588,578 |
) |
$ |
(3,392,016 |
) |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Land, buildings and amenities, net |
|
$ |
279,703,125 |
|
$ |
26,676,306 |
|
$ |
3,667,298 |
|
$ |
|
|
$ |
310,046,729 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Expenditures for land, buildings and amenities |
|
$ |
692,449 |
|
$ |
564,098 |
|
$ |
11,587 |
|
$ |
|
|
$ |
1,268,134 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Segment liabilities from continuing operations |
|
$ |
245,984,732 |
|
$ |
2,934,727 |
|
$ |
44,942 |
|
$ |
28,542,766 |
|
$ |
277,507,167 |
|
Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
Managements Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements in Item 1 and the cautionary statements below.
Critical Accounting Policies
A critical accounting policy is one that would materially affect our operations or financial condition, and requires management to make estimates or judgments in certain circumstances. These judgments often result from the need to make estimates about the effect of matters that are inherently uncertain. Critical accounting policies discussed in this section are not to be confused with accounting principles and methods disclosed in accordance with U.S. generally accepted accounting principles (GAAP). GAAP requires information in financial statements about accounting principles, methods used and disclosures pertaining to significant estimates. Our critical accounting policies, as previously disclosed in our most recent annual report on Form 10-K, which was filed with the Securities and Exchange Commission on March 23, 2012, discuss judgments known to management pertaining to trends, events or uncertainties which were taken into consideration upon the application of those policies and the likelihood that materially different amounts would be reported upon taking into consideration different conditions and assumptions and remain unchanged during the quarter ended March 31, 2012.
Results of Operations
As of March 31, 2012, we owned wholly, as a tenant in common with an unaffiliated third party or through joint venture investments with both affiliated and unaffiliated third parties, 15 multifamily properties, 7 commercial properties and 2 retail properties. We generate substantially all of our operating income from property operations.
Net losses for the three months ended March 31, 2012 and 2011 were approximately $2.7 million and $3.4 million, respectively. The change in net loss for the three months ended March 31, 2012 as compared to March 31, 2011 was primarily due to a $0.8 million increase in operating income and a $0.2 million increase in net loss attributable to noncontrolling interests. This was partially offset by a $0.2 million decrease in interest and other income and a $0.1 million increase in loss from investment in joint venture. There were no other material offsetting changes in net loss for the three months ended March 31, 2012 and 2011.
The following tables include certain selected summarized operating data for the three months ended March 31, 2012 and 2011. This data should be read in conjunction with our financial statements, including the notes attached hereto.
|
|
(Unaudited) |
| |||||||||||||
|
|
Three Months Ended March 31, 2012 |
| |||||||||||||
|
|
Multifamily |
|
Commercial |
|
Retail |
|
Partnership |
|
Total |
| |||||
Total revenues |
|
$ |
12,003,185 |
|
$ |
1,889,956 |
|
$ |
154,161 |
|
$ |
(5,774 |
) |
$ |
14,041,528 |
|
Operating expenses and operating expenses reimbursed to affiliate |
|
4,647,052 |
|
650,889 |
|
29,278 |
|
|
|
5,327,219 |
| |||||
Depreciation and amortization |
|
3,942,577 |
|
445,284 |
|
40,630 |
|
|
|
4,428,491 |
| |||||
Total interest expense |
|
(3,245,980 |
) |
(150,279 |
) |
(11 |
) |
(100,266 |
) |
(3,496,536 |
) | |||||
Net (loss) income |
|
(2,203,378 |
) |
233,380 |
|
60,739 |
|
(818,072 |
) |
(2,727,331 |
) | |||||
|
|
(Unaudited) |
| |||||||||||||
|
|
Three Months Ended March 31, 2011 |
| |||||||||||||
|
|
Multifamily |
|
Commercial |
|
Retail |
|
Partnership |
|
Total |
| |||||
Total revenues |
|
$ |
11,283,896 |
|
$ |
1,805,217 |
|
$ |
168,397 |
|
$ |
(8,903 |
) |
$ |
13,248,607 |
|
Operating expenses and operating expenses reimbursed to affiliate |
|
4,248,679 |
|
694,379 |
|
42,045 |
|
|
|
4,985,103 |
| |||||
Depreciation and amortization |
|
4,300,546 |
|
443,499 |
|
41,805 |
|
|
|
4,785,850 |
| |||||
Total interest expense |
|
(3,319,912 |
) |
(145,483 |
) |
(12,376 |
) |
(56,509 |
) |
(3,534,280 |
) | |||||
Net (loss) income |
|
(3,030,853 |
) |
178,310 |
|
49,105 |
|
(588,578 |
) |
(3,392,016 |
) | |||||
Occupancy levels at our properties by segment as of March 31, 2012 and 2011 were as follows:
|
|
2012 |
|
2011 |
|
Multifamily |
|
96 |
% |
96 |
% |
Multifamily Unconsolidated Investment in Tenants in Common |
|
98 |
% |
95 |
% |
Commercial |
|
81 |
% |
80 |
% |
Commercial Unconsolidated Investment in Joint Venture (1) |
|
9 |
% |
|
|
Retail |
|
90 |
% |
95 |
% |
(1) Our commercial unconsolidated investment in joint venture property was 73% leased as of March 31, 2012.
The average occupancy levels at our properties by segment for the three months ended March 31, 2012 and 2011 were as follows:
|
|
Three Months Ended March 31, |
| ||
|
|
2012 |
|
2011 |
|
Multifamily |
|
96 |
% |
96 |
% |
Multifamily Unconsolidated Investment in Tenants in Common |
|
97 |
% |
94 |
% |
Commercial |
|
81 |
% |
78 |
% |
Commercial Unconsolidated Investment in Joint Venture (1) |
|
9 |
% |
|
|
Retail |
|
90 |
% |
95 |
% |
(1) Our commercial unconsolidated investment in joint venture property was 73% leased as of March 31, 2012.
We believe the changes in average and period end occupancy from period to period are temporary effects of each propertys specific mix of lease maturities and are not indicative of any known trend or uncertainty.
We have on-site leasing staff, who are employees of NTS Development Company, at each of the multifamily properties. The staff handles all on-site visits from potential tenants, coordinates local advertising with NTS Development Companys marketing staff, makes visits to local companies to promote fully furnished apartments and negotiates lease renewals with current residents.
The leasing and renewal negotiations for our commercial and retail properties are primarily handled by leasing agents that are employees of NTS Development Company. All advertising for the commercial and retail properties is coordinated by NTS Development Companys marketing staff located in Louisville, Kentucky.
The following discussion relating to changes in our results of operations includes only material line items within our unaudited condensed consolidated statements of operations or line items for which there was a material change between the three months ended March 31, 2012 and 2011.
Rental Income and Tenant Reimbursements
Rental income and tenant reimbursements from continuing operations for the three months ended March 31, 2012 and 2011 were approximately $14.0 million and $13.2 million, respectively. The increase of $0.8 million, or 6%, was primarily the result of a $0.7 million increase in rental income across the multifamily segment primarily related to an increase in the average monthly unit rental to $1,013 from $950 for the three months ended March 31, 2012 and 2011, respectively. The increase is also the result of a $0.1 million increase in rental income and tenant reimbursements across the commercial segment primarily due to an increase in average occupancy to 81% from 78% for the three months ended March 31, 2012 and 2011, respectively. There were no other material offsetting changes in rental income and tenant reimbursements for the three months ended March 31, 2012 and 2011.
Operating Expenses and Operating Expenses Reimbursed to Affiliate
Operating expenses from continuing operations for the three months ended March 31, 2012 and 2011 were approximately $3.8 million and $3.6 million, respectively. The increase of $0.2 million, or 6%, was primarily the result of a $0.3 million increase in operating expense across the multifamily segment primarily related to additional landscaping. There were no other material offsetting changes in operating expenses for the three months ended March 31, 2012 and 2011.
Operating expenses reimbursed to affiliate from continuing operations for the three months ended March 31, 2012 and 2011 were approximately $1.5 million and $1.4 million, respectively. The increase of $0.1 million, or 7%, was primarily the result of a $0.1 million increase in operating expenses reimbursed to affiliate across the multifamily segment. There were no other material offsetting changes in operating expenses reimbursed to affiliate for the three months ended March 31, 2012 and 2011.
We do not have any employees. Pursuant to our various management agreements, NTS Development employs the individuals who provide services necessary to operate our properties and conduct our business. NTS Development provides employees that may also perform services for other properties and business enterprises. In the situation where a particular employee benefits multiple operations, the employees cost is proportionately charged out to the entity receiving the services. We only reimburse charges from NTS Development for actual costs of employee services incurred for our benefit. The cost of services provided to us by NTS Developments employees are classified in our condensed consolidated statements of operations as operating expenses reimbursed to affiliate. The services provided by others are classified as operating expenses.
Operating expenses reimbursed to affiliate are for services performed by employees of NTS Development, an affiliate of our general partner. These employee services include property management, leasing, maintenance, security and other services necessary to manage and operate our business.
Operating expenses reimbursed to affiliate from continuing operations consisted approximately of the following:
|
|
(Unaudited) |
| ||||
|
|
Three Months Ended March 31, |
| ||||
|
|
2012 |
|
2011 |
| ||
Property |
|
$ |
1,014,000 |
|
$ |
982,000 |
|
Multifamily leasing |
|
209,000 |
|
175,000 |
| ||
Administrative |
|
278,000 |
|
262,000 |
| ||
Other |
|
43,000 |
|
11,000 |
| ||
|
|
|
|
|
| ||
Total |
|
$ |
1,544,000 |
|
$ |
1,430,000 |
|
Management Fees
Management fees from continuing operations for each of the three months ended March 31, 2012 and 2011 were approximately $0.7 million. There were no material offsetting changes in management fees for the three months ended March 31, 2012 and 2011.
Pursuant to our various management agreements, NTS Development Company and or its affiliate, NTS Management Company, (collectively referred to as NTS Development) receives property management fees equal to 5% of the gross collected revenue from our properties. This includes our wholly-owned properties, our consolidated and unconsolidated joint venture properties and properties owned by our eight wholly-owned subsidiaries financed through FHLMC. NTS Development receives property management fees from our unconsolidated properties owned as a tenant in common with an unaffiliated third party equal to 3.5% of their gross collected revenue under separate management agreements. We were the beneficiary of a preferential ownership interest, disproportionately greater than our initial cash investment in each property owned as a tenant in common with an unaffiliated third party. NTS Development has agreed to accept a lower management fee for the properties we own as a tenant in common with an unaffiliated third party in exchange for a larger potential disposition fee. Disposition fees of up to 6% of the gross sales price may be paid to NTS Development for the sale of one of our properties owned as a tenant in common with an unaffiliated third party. Management fees are calculated as a percentage of cash collections and are recorded on the accrual basis. As a result, the fluctuations in revenue between years will differ from the fluctuations of management fee expense.
Property Taxes and Insurance
Property taxes and insurance from continuing operations for the three months ended March 31, 2012 and 2011 were approximately $1.8 million and $1.9 million, respectively. The decrease of $0.1 million, or 5%, was primarily the result of approximately $0.1 million for Indiana property tax consulting services in 2011 without similar expense in 2012. There were no other material offsetting changes in property taxes and insurance for the three months ended March 31, 2012 and 2011.
Professional and Administrative Expenses and Professional and Administrative Expenses Reimbursed to Affiliate
Professional and administrative expenses from continuing operations for each of the three months ended March 31, 2012 and 2011 were approximately $0.3 million. There were no material offsetting changes in professional and administrative expenses for the three months ended March 31, 2012 and 2011.
Professional and administrative expenses reimbursed to affiliate from continuing operations for each of the three months ended March 31, 2012 and 2011 were $0.4 million. There were no material offsetting changes in professional and administrative expenses reimbursed to affiliate for the three months ended March 31, 2012 and 2011.
We do not have any employees. Pursuant to our various management agreements, NTS Development employs the individuals who provide services necessary to operate our properties and conduct our business. NTS Development provides employees that may also perform services for other properties and business enterprises. In the situation where a particular employee benefits multiple operations, the employees cost is proportionately
charged out to the entity receiving the services. We only reimburse charges from NTS Development for actual costs of employee services incurred for our benefit. The cost of services provided to us by NTS Developments employees are classified in our condensed consolidated statements of operations as professional and administrative expenses reimbursed to affiliate. The services provided by others are classified as professional and administrative expenses.
Professional and administrative expenses reimbursed to affiliate are for the services performed by employees of NTS Development, an affiliate of our general partner. These employee services include legal, financial and other services necessary to manage and operate our business.
Professional and administrative expenses reimbursed to affiliate from continuing operations consisted approximately of the following:
|
|
(Unaudited) |
| ||||
|
|
Three Months Ended March 31, |
| ||||
|
|
2012 |
|
2011 |
| ||
Finance |
|
$ |
109,000 |
|
$ |
108,000 |
|
Accounting |
|
195,000 |
|
195,000 |
| ||
Investor relations |
|
75,000 |
|
70,000 |
| ||
Human resources |
|
5,000 |
|
5,000 |
| ||
Overhead |
|
53,000 |
|
49,000 |
| ||
|
|
|
|
|
| ||
Total |
|
$ |
437,000 |
|
$ |
427,000 |
|
Depreciation and Amortization
Depreciation and amortization from continuing operations for the three months ended March 31, 2012 and 2011 was approximately $4.4 million and $4.8 million, respectively. The decrease of $0.4 million, or 8%, was primarily due to a decrease in depreciation and amortization of approximately $0.4 million spread across the multifamily segment. There were no other material offsetting changes in depreciation and amortization for the three months ended March 31, 2012 and 2011.
Interest and Other Income
Interest and other income from continuing operations for the three months ended March 31, 2012 and 2011 was approximately $20,000 and $0.2 million, respectively. The decrease was primarily due to a decrease in interest income earned on notes receivable. There were no other material offsetting changes in interest and other income for the three months ended March 31, 2012 and 2011.
Interest Expense
Interest expense from continuing operations for each of the three months ended March 31, 2012 and 2011 was approximately $3.5 million. There were no material offsetting changes in interest expense for the three months ended March 31, 2012 and 2011.
Loss on Disposal of Assets
The loss on disposal of assets from continuing operations for the three months ended March 31, 2012 and 2011 can be attributed to assets that were not fully depreciated at the time of replacement spread primarily amongst the multifamily and commercial properties.
Loss from Investment in Joint Venture
Loss from investment in joint venture for the three months ended March 31, 2012 and 2011 includes net operating loss attributable to our investment in a joint venture with an unaffiliated third party. The property is 600 North Hurstbourne. There are no other material offsetting changes in loss from investment in joint venture for the three months ended March 31, 2012 and 2011.
Loss from Investments in Tenants in Common
Loss from investments in tenants in common for the three months ended March 31, 2012 and 2011 includes net operating losses attributable to our investments in tenants in common with an unaffiliated third party. The properties are The Overlook at St. Thomas Apartments and Creeks Edge at Stony Point Apartments. There were no other material offsetting changes in loss from investments in tenants in common for the three months ended March 31, 2012 and 2011.
The continuing net losses of The Overlook at St. Thomas Apartments reduced our investment to zero. We have recognized the losses in excess of our investment and recorded the resulting liability on our condensed consolidated balance sheets.
Liquidity and Capital Resources
Our most liquid asset is our cash and equivalents, which consist of cash and short-term investments, but do not include any restricted cash. Operating income generated by the properties is the primary source from which we generate cash. Other sources of cash include the proceeds from our mortgage loans and revolving notes payable. Our main uses of cash relate to capital expenditures, required payments of mortgages and notes payable, distributions and property taxes.
The components of the condensed consolidated statements of cash flows for the three months ended March 31, 2012 and 2011 consisted approximately of the following:
|
|
(Unaudited) |
| ||||
|
|
Three Months Ended March 31, |
| ||||
|
|
2012 |
|
2011 |
| ||
Operating activities |
|
$ |
1,935,000 |
|
$ |
1,643,000 |
|
Investing activities |
|
(1,743,000 |
) |
(1,576,000 |
) | ||
Financing activities |
|
(100,000 |
) |
445,000 |
| ||
|
|
|
|
|
| ||
Net increase in cash and equivalents |
|
$ |
92,000 |
|
$ |
512,000 |
|
Cash Flow from Operating Activities
Net cash provided by operating activities was approximately $1.9 million and $1.6 million for the three months ended March 31, 2012 and 2011, respectively. The change of approximately $0.3 million was primarily related to increased cash provided by other assets of approximately $1.5 million consisting primarily of a $0.9 million payment received on a note receivable issued in 2008 and a decrease in cash used for a $0.5 million refundable deposit for permanent financing on Lakes Edge Apartments in 2011. Our cash provided is partially offset by increased cash used to satisfy accounts payable and accounts payable due to affiliate of approximately $1.1 million. The remaining increases and decreases in cash were individually immaterial.
Cash Flow from Investing Activities
Net cash used in investing activities was approximately $1.7 million and $1.6 million for the three months ended March 31, 2012 and 2011, respectively. The change of approximately $0.1 million was primarily due to increased cash used to invest in our joint venture with an unaffiliated third party of approximately $0.4 million partially offset by decreased cash used to purchase land, buildings and amenities of approximately $0.2 million. The remaining increases and decreases in cash were individually immaterial.
Cash Flow from Financing Activities
Net cash used in financing activities was approximately $0.1 million compared to net cash provided by financing activities of approximately $0.4 million for the three months ended March 31, 2012 and 2011, respectively. The change of approximately $0.5 million was primarily due to a decrease in cash provided by our revolving notes payable, net of receipts, of approximately $0.3 million and an increase in principal payments on our mortgages payable of approximately $0.2 million. The remaining increases and decreases in cash were individually immaterial.
Future Liquidity
Our future liquidity depends significantly on our properties occupancy remaining at a level which allows us to make debt payments and have adequate working capital, currently and in the future. If occupancy were to fall below that level and remain at or below that level for a significant period of time, our ability to make payments due under our debt agreements and to continue paying daily operational costs would be materially impaired. In the next twelve months, we intend to operate the properties in a similar manner to their operation in recent years. Cash reserves, which consist of unrestricted cash as shown on our balance sheet, were approximately $1.3 million as of March 31, 2012.
On March 14, 2012, we announced that the board of directors of our managing general partner approved a quarterly distribution of $0.05 per unit on our limited partnership units. The distribution was paid on April 13, 2012, to limited partners of record at the close of business on March 30, 2012.
Pursuant to leasing agreements signed by March 31, 2012, we are obligated to incur expenditures of approximately $0.5 million funded by borrowings on our debt during the next twelve months, primarily for renovations and tenant origination costs necessary to continue leasing our properties. This discussion of future liquidity details our material commitments. We anticipate repaying, seeking renewal or refinancing of our revolving note payable coming due in the next twelve months.
Our availability to draw on our $10.0 million revolving note payable was approximately $5.4 million as of March 31, 2012.
On October 28, 2010, we entered into a joint venture investment agreement with an unaffiliated third party to invest in a commercial office building located in Louisville, Kentucky. The building, known as 600 North Hurstbourne, was developed by our affiliate, NTS Development Company, with construction completed in early 2012. The building is managed by an affiliate of NTS Development Company. We are obligated to contribute $4.9 million, for a 49% ownership interest. We intend to fund our share of this investment with cash on hand, cash from operations or borrowing on new or existing debt. At March 31, 2012 we had funded $3.3 million of this commitment. We expect to fund the remaining $1.6 million in the second quarter of 2012. The joint venture has entered into a $10.5 million construction financing agreement with a bank. The joint venture expects to invest a total of $20.5 million in the construction of the building and completion of tenant space.
Property Transactions
Acquisitions
During the three months ended March 31, 2012 and 2011, we did not acquire any properties.
Dispositions
During the three months ended March 31, 2012 and 2011, we did not dispose of any properties.
We may engage in transactions structured as like-kind exchanges of property to obtain favorable tax treatment under Section 1031 of the Internal Revenue Code. If we are able to structure an exchange of properties as a like-kind exchange, then any gain we realize from the exchange would not be recognized for federal income tax purposes. The test for determining whether exchanged properties are of like-kind is whether the properties are of the same nature or character.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Website Information
Information concerning NTS Realty Holdings Limited Partnership is available through the NTS Development Company website (www.ntsdevelopment.com). Our annual reports on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act are available and may be accessed free of charge through the Investor Services section of our website as soon as reasonably practicable after we electronically file this material with, or furnish it to, the SEC. Our website and the information contained therein or connected thereto are not incorporated into this Quarterly Report on Form 10-Q.
Item 3 Quantitative and Qualitative Disclosures About Market Risk
Our primary market risk exposure with regard to financial instruments is expected to be our exposure to changes in interest rates. We have refinanced substantially all of our debt with instruments which bear interest at a fixed rate, with the exception of approximately $49.1 million at variable rates. We anticipate that a hypothetical 100 basis point increase in interest rates would increase interest expense on our variable rate debt by approximately $0.5 million annually. The average variable interest rate at March 31, 2012 was 3.5%.
Contractual Obligations and Commercial Commitments
The following table represents our obligations and commitments to make future payments as of March 31, 2012 under contracts, such as debt and lease agreements including principal and interest, and under contingent commitments, such as debt guarantees.
|
|
Payment Due by Period |
| |||||||||||||
|
|
Total |
|
Within |
|
One Three |
|
Three Five |
|
After Five |
| |||||
Contractual Obligations |
|
|
|
|
|
|
|
|
|
|
| |||||
Mortgages and notes payable |
|
$ |
349,797,043 |
|
$ |
22,225,448 |
|
$ |
64,376,660 |
|
$ |
51,987,360 |
|
$ |
211,207,575 |
|
Capital lease obligations |
|
|
|
|
|
|
|
|
|
|
| |||||
Operating leases (1) |
|
|
|
|
|
|
|
|
|
|
| |||||
Other long-term obligations (2) |
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|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total contractual cash obligations |
|
$ |
349,797,043 |
|
$ |
22,225,448 |
|
$ |
64,376,660 |
|
$ |
51,987,360 |
|
$ |
211,207,575 |
|
(1) We are party to numerous small operating leases for office equipment such as copiers, postage machines and fax machines, which represent an insignificant obligation.
(2) We are party to several annual maintenance agreements with vendors for such items as outdoor maintenance, pool service and security systems, which represent an insignificant obligation.
Item 4 Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended (the Exchange Act), our management, including our Chief Executive Officer and Chief Financial Officer, evaluated as of March 31, 2012, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of March 31, 2012, were effective for the purpose of ensuring that information required to be disclosed by us in this report is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting that occurred during the quarter ended March 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
None.
Our principal unit holders may effectively exercise control over matters requiring unit holder approval.
As of March 31, 2012, Mr. J.D. Nichols beneficially owned approximately 61.7% of the outstanding NTS Realty Holdings Limited Partnership Units. Mr. Nichols effectively has the power to elect all of the directors and control the management, operations and affairs of NTS Realty Holdings Limited Partnership. His ownership may discourage someone from making a significant equity investment in NTS Realty Holdings Limited Partnership, even if we needed the investment to operate our business. His holdings could be a significant factor in delaying or preventing a change of control transaction that other limited partners may deem to be in their best interests, such as a transaction in which the other limited partners would receive a premium for their units over their current trading prices.
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended March 31, 2012, no units were purchased by the entities created or controlled by Mr. Nichols pursuant to the previously announced trading plans. The table below summarizes activity pursuant to these plans for the three months ended March 31, 2012.
Period |
|
Total Number of |
|
Average Price Paid |
|
Total Number of |
|
Maximum Number |
| |
January 2012 |
|
|
|
$ |
N/A |
|
493,969 |
(2) |
(1) |
|
|
|
|
|
|
|
|
|
|
| |
February 2012 |
|
|
|
$ |
N/A |
|
493,969 |
(2) |
(1) |
|
|
|
|
|
|
|
|
|
|
| |
March 2012 |
|
|
|
$ |
N/A |
|
493,969 |
(2) |
(1) |
|
|
|
|
|
|
|
|
|
|
| |
Total |
|
|
|
$ |
N/A |
|
493,969 |
(2) |
(1) |
|
(1) A description of the maximum amount that may be used to purchase our units under the trading plans is included in the narrative preceding this table.
(2) Represents the total number of our limited partnership units that have been purchased pursuant to the trading plans by entities created or controlled by Mr. Nichols, pursuant to the current or any previous publicly announced plan or program by trading plans.
Item 3 Defaults Upon Senior Securities
None.
Item 4 Mine Safety Disclosures
None.
None.
Exhibit No. |
|
|
|
|
2.01 |
|
Agreement and Plan of Merger by and among NTS Realty Holdings Limited Partnership, NTS-Properties III, NTS-Properties IV, NTS-Properties V, a Maryland limited partnership, NTS-Properties VI, a Maryland limited partnership and NTS-Properties VII, Ltd., dated February 3, 2004 |
|
(3) |
|
|
|
|
|
2.02 |
|
Contribution Agreement by and between NTS Realty Holdings Limited Partnership and ORIG, LLC, dated February 3, 2004 |
|
(3) |
|
|
|
|
|
3.01 |
|
Certificate of Limited Partnership of NTS Realty Holdings Limited Partnership |
|
(1) |
|
|
|
|
|
3.02 |
|
Amended and Restated Agreement of Limited Partnership of NTS Realty Holdings Limited Partnership, dated as of December 29, 2005 |
|
(7) |
|
|
|
|
|
3.03 |
|
Certificate of Incorporation of NTS Realty Capital, Inc. |
|
(8) |
|
|
|
|
|
3.04 |
|
By-Laws of NTS Realty Capital, Inc. |
|
(2) |
|
|
|
|
|
10.01 |
|
Amended and Restated Management Agreement between NTS Realty Holdings Limited Partnership and NTS Development Company, dated as of December 29, 2005 |
|
(6) |
|
|
|
|
|
10.02 |
|
Form of Lease Agreement between NTS Realty Holdings Limited Partnership and SHPS, Inc. |
|
(4) |
|
|
|
|
|
10.03 |
|
Purchase and Sale Agreement between NTS Realty Holdings Limited Partnership and Investors Capital Mortgage Group, Inc., dated September 30, 2005 (Golf Brook Apartments) |
|
(5) |
|
|
|
|
|
10.04 |
|
Purchase and Sale Agreement between NTS Realty Holdings Limited Partnership and Investors Capital Mortgage Group, Inc., dated September 30, 2005 (Sabal Park Apartments) |
|
(5) |
|
|
|
|
|
10.05 |
|
Agreement for Purchase and Sale between Schaedle Worthington Hyde Properties, L.P. and NTS Realty Holdings Limited Partnership, dated November 1, 2005 (The Grove at Richland Apartments and The Grove at Whitworth Apartments) |
|
(5) |
|
|
|
|
|
10.06 |
|
Agreement for Purchase and Sale between Schaedle Worthington Hyde Properties, L.P. and NTS Realty Holdings Limited Partnership, dated November 1, 2005 (The Grove at Swift Creek Apartments) |
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(5) |
|
|
|
|
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10.07 |
|
Purchase and Sale Agreement between AMLI at Castle Creek, L.P. and AMLI Residential Properties, L.P. and NTS Realty Holdings Limited Partnership, dated February 7, 2006 (Castle Creek Apartments and Lake Clearwater Apartments) |
|
(5) |
|
|
|
|
|
10.08 |
|
Unconditional and Continuing Guaranty by NTS Realty Holdings Limited Partnership in favor of National City Bank, dated March 23, 2006 |
|
(5) |
|
|
|
|
|
10.09 |
|
Amended and Restated Master Loan Agreements between NTS Realty Holding Limited Partnership and The Northwestern Mutual Life Insurance Company and between NTS Realty Holdings Limited Partnership and National City Bank, dated October 4, 2006 |
|
(9) |
|
|
|
|
|
10.10 |
|
Purchase and Sale Agreement between NTS Realty Holdings Limited Partnership and Meridian Realty Investments, LLC, dated November 10, 2006 (Springs Medical Office Center) |
|
(10) |
|
|
|
|
|
10.11 |
|
Purchase and Sale Agreement between NTS Realty Holdings Limited Partnership and Meridian Realty Investments, LLC, dated November 10, 2006 (Springs Office Center) |
|
(10) |
|
|
|
|
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10.12 |
|
Purchase and Sale Agreement between NTS Realty Holdings Limited Partnership together with Overlook Associates, LLC and The Northwestern Mutual Life Insurance Company, dated December 8, 2006 (The Overlook at St. Thomas Apartments) |
|
(11) |
|
|
|
|
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10.13 |
|
Purchase and Sale Agreement between NTS Realty Holdings Limited Partnership together with Creeks Edge Investors, LLC and CG Stony Point, LLC, dated June 20, 2007 (Creeks Edge at Stony Point Apartments) |
|
(12) |
|
|
|
|
|
10.14 |
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Purchase and Sale Agreement between NTS Realty Holdings Limited Partnership and Ascent Properties, LLC, dated August 1, 2007 (The Office Portfolio) |
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(13) |
|
|
|
|
|
10.15 |
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Purchase and Sale Agreement between NTS Realty Holdings Limited Partnership and Colonial Realty Limited Partnership and Colonial Properties Services, Inc., dated June 11, 2008 (Shelby Farms Apartments) |
|
(14) |
|
|
|
|
|
10.16 |
|
Purchase and Sale Agreement between NTS Realty Holdings Limited Partnership and 302 Sabal Park Place Longwood, LLC and 385 Golf Brook Circle Longwood, LLC dated April 10, 2009 (Sabal Park Apartments and Golf Brook Apartments) |
|
(15) |
Exhibit No. |
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|
|
|
10.17 |
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Purchase and Sale Agreement between NTS Realty Holdings Limited Partnership and Corac, LLC, dated December 23, 2010 (Lakes Edge Apartments) |
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(16) |
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|
|
|
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10.18 |
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Mortgage, Security Agreement and Fixture Filing, dated as of April 20, 2011, by Lakes Edge Apartments, LLC to Metlife Bank, N.A., a national banking association |
|
(17) |
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|
|
|
|
10.19 |
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Promissory Note, made as of April 20, 2011, by Lakes Edge Apartments, LLC to Metlife Bank, N.A., a national banking association |
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(17) |
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|
|
|
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10.20 |
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Guaranty Agreement, dated as of April 20, 2011, by NTS Realty Holdings Limited Partnership for the benefit of Metlife Bank, N.A., a national banking association |
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(17) |
|
|
|
|
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14.01 |
|
Code of Conduct and Ethics of NTS Realty Holdings Limited Partnership, adopted as of December 28, 2004 |
|
(4) |
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|
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|
|
31.1 |
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Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended |
|
(18) |
|
|
|
|
|
31.2 |
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended |
|
(18) |
|
|
|
|
|
32.1 |
|
Certification of Chief Executive Officer Pursuant to U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
(18) |
|
|
|
|
|
32.2 |
|
Certification of Chief Financial Officer Pursuant to U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
(18) |
|
|
|
|
|
99.01 |
|
Form of Lock-Up Agreement by and between NTS Realty Holdings Limited Partnership and each of the executive officers of NTS Realty Capital, Inc. |
|
(1) |
|
|
|
|
|
99.02 |
|
Registration Statement on Form S-4/A (Amendment No. 5), as filed by the Registrant with the Securities and Exchange Commission on October 27, 2004 |
|
(3) |
|
|
|
|
|
101 |
|
The following financial information from our Quarterly Report on Form 10-Q for the three months ended March 31, 2012, filed with the Securities and Exchange Commission on May 9, 2012, is formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statement of Equity, (iii) Condensed Consolidated Statements of Operations, (iv) Condensed Consolidated Statements of Cash Flows, (v) Notes to Condensed Consolidated Financial Statements (tagged as blocks of text). |
|
(18) (19) |
(1) |
|
Incorporated by reference to the Registrants Registration Statement on Form S-4, as filed with the Securities and Exchange Commission on February 4, 2004 |
|
(2) |
|
Incorporated by reference to the Registrants Registration Statement on Form S-4/A (Amendment No. 1), as filed with the Securities and Exchange Commission on June 18, 2004 |
|
(3) |
|
Incorporated by reference to the Registrants Registration Statement on Form S-4/A (Amendment No. 5), as filed with the Securities and Exchange Commission on October 27, 2004 |
|
(4) |
|
Incorporated by reference to the Registrants Annual Report on Form 10-K for the year ended December 31, 2004, as filed with the Securities and Exchange Commission on March 31, 2005 |
|
(5) |
|
Incorporated by reference to the Registrants Annual Report on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission on April 3, 2006 |
|
(6) |
|
Incorporated by reference to the Registrants Current Report on Form 8-K, as filed with the Securities and Exchange Commission on April 17, 2006 |
|
(7) |
|
Incorporated by reference to the Registrants Information Statement on Form DEF 14C, as filed with the Securities and Exchange Commission on May 9, 2006 |
|
(8) |
|
Incorporated by reference to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, as filed with the Securities and Exchange Commission on May 15, 2006 |
|
(9) |
|
Incorporated by reference to the Registrants Current Report on Form 8-K/A, as filed with the Securities and Exchange Commission on October 23, 2006 |
|
(10) |
|
Incorporated by reference to the Registrants Current Report on Form 8-K, as filed with the Securities and Exchange Commission on February 14, 2007 |
|
(11) |
|
Incorporated by reference to the Registrants Current Report on Form 8-K, as filed with the Securities and Exchange Commission on March 16, 2007 |
|
(12) |
|
Incorporated by reference to the Registrants Current Report on Form 8-K, as filed with the Securities and Exchange Commission on August 17, 2007 |
|
(13) |
|
Incorporated by reference to the Registrants Current Report on Form 8-K, as filed with the Securities and Exchange Commission on May 1, 2008 |
|
(14) |
|
Incorporated by reference to the Registrants Current Report on Form 8-K, as filed with the Securities and Exchange Commission on June 27, 2008 |
|
(15) |
|
Incorporated by reference to the Registrants Current Report on Form 8-K, as filed with the Securities and Exchange Commission on June 16, 2009 |
|
(16) |
|
Incorporated by reference to the Registrants Current Report on Form 8-K, as filed with the Securities and |
|
|
|
Exchange Commission on December 23, 2010 |
|
(17) |
|
Incorporated by reference to the Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, as filed with the Securities and Exchange Commission on August 8, 2011 |
|
(18) |
|
Filed herewith |
|
(19) |
|
The XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed filed for the purpose of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document. |
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
NTS REALTY HOLDINGS LIMITED PARTNERSHIP | |||||
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| ||
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By: |
NTS REALTY CAPITAL, INC. | ||||
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Its: |
Managing General Partner | |||
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| |||
|
|
By: |
/s/ Brian F. Lavin | |||
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|
|
Brian F. Lavin | |||
|
|
|
Its: |
President and Chief Executive Officer | ||
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|
|
|
(Principal Executive Officer) | ||
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|
|
Date: |
May 9, 2012 | ||
|
|
|
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| ||
|
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By: |
/s/ Gregory A. Wells | |||
|
|
|
Gregory A. Wells | |||
|
|
|
Its: |
Chief Financial Officer | ||
|
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|
|
(Principal Financial Officer and | ||
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Date: |
May 9, 2012 | ||