Item 3. LEGAL PROCEEDINGS
None.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
Item 5.
Item 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP INTERESTS AND PARTNER MATTERS
There is no established trading market for the limited partnership interests. The Partnership had 1,267 limited partners as of March 1, 1999. Cash distributions and allocations of net income (loss) are made as described in Note 1C to the Partnership's 1998 financial statements.
Annual distributions totaling $.25, $.40 and $.40 per limited partnership Unit were paid during the years ended December 31, 1998, 1997 and 1996, respectively. Quarterly distributions are determined based on current cash balances, cash flow being generated by operations and cash reserves needed for future leasing costs, tenant finish costs and capital improvements. Distributions were paid quarterly as follows:
The table below presents that portion of the distributions that represent a return of capital on a Generally Accepted Accounting Principle basis for the years ended December 31, 1998, 1997 and 1996.
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Item 6.
Item 6. SELECTED FINANCIAL DATA
For the years ended December 31, 1998, 1997, 1996, 1995 and 1994.
The above selected financial data should be read in conjunction with the financial statements and related notes appearing elsewhere in this Form 10-K report.
(1) See Note 7 in Item 8 for information regarding the extraordinary item.
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Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations is structured in four major sections. The first section provides information related to occupancy levels and rental and other income generated by the Partnership's properties. The second analyzes results of operations on a consolidated basis. The final sections address consolidated cash flows and financial condition. Discussion of certain market risks and our cautionary statements also follow. Management's analysis should be read in conjunction with the financial statements in Item 8
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To NTS-Properties VII, Ltd.:
We have audited the accompanying balance sheets of NTS-Properties VII, Ltd. (a Florida limited partnership) as of December 31, 1998 and 1997, and the related statements of operations, partners' equity and cash flows for each of the three years in the period ended December 31, 1998. These financial statements and schedules referred to below are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of NTS-Properties VII, Ltd. as of December 31, 1998 and 1997 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules included on pages 39 and 40 are presented for purposes of complying with the Securities and Exchange Commission's rules and regulations and are not a required part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Louisville, Kentucky March 12, 1999
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NTS-PROPERTIES VII, LTD.
BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1997
The accompanying notes to financial statements are an integral part of these statements.
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The accompanying notes to financial statements are an integral part of these statements.
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The accompanying notes to financial statements are an integral part of these statements.
(1) For the periods presented, there are no elements of other comprehensive income as defined by the Financial Accounting Standards Board, Statement of Financial Accounting Standards, Standards Statement No. 130, REPORTING COMPREHENSIVE INCOME.
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NTS-PROPERTIES VII, LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
The accompanying notes to financial statements are an integral part of these statements.
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NTS-PROPERTIES VII, LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1. SIGNIFICANT ACCOUNTING POLICIES
A) ORGANIZATION
NTS-Properties VII, LTD. (the "Partnership") is a limited partnership organized under the laws of the State of Florida in April 1987. The General Partner is NTS-Properties Associates VII (a Kentucky limited partnership). The Partnership is in the business of developing, constructing, owning and operating apartment complexes and commercial real estate.
B) PROPERTIES
The Partnership owns and operates the following properties:
- The Park at the Willows, a 48-unit luxury apartment complex in Louisville, Kentucky.
- Park Place Apartments Phase II, a 132-unit luxury apartment complex in Lexington, Kentucky.
- A 31% joint venture interest in Blankenbaker Business Center Phase 1A, a business center with approximately 50,000 net rentable ground floor square feet and approximately 50,000 net rentable mezzanine square feet located in Louisville, Kentucky.
C) ALLOCATION OF NET INCOME (LOSS) AND CASH DISTRIBUTIONS
Pre-Termination Date Net Cash Receipts and Interim Net Cash Receipts, as defined in the partnership agreement, and which are made available for distribution, will be distributed 99% to the limited partners and 1% to the General Partner.
Net Operating Income (excluding Net Gains from Sales and other specially allocated items) shall be allocated to the limited partners and the General Partner in proportion to their respective cash distributions. Net Operating Income in excess of cash distributions shall be allocated as follows: (1) pro rata to all partners with a negative capital account in an amount to restore the negative capital account to zero; (2) 99% to the limited partners and 1% to the General Partner until the limited partners have received an amount equal to their Original Capital less cash distributions except distributions of Pre-Termination Date Net Cash Receipts; (3) the balance, 80% to the limited partners and 20% to the General Partner. Net Operating Losses shall be allocated 99% to the limited partners and 1% to the General Partner.
D) TAX STATUS
The Partnership has received a ruling from the Internal Revenue Service stating that the Partnership is classified as a limited partnership for federal income tax purposes. As such, the Partnership makes no provision for income taxes. The taxable income or loss is passed through to the holders of the partnership interests for inclusion on
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their individual income tax returns.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
D) TAX STATUS - CONTINUED
A reconciliation of net income (loss) for financial statement purposes versus that for income tax reporting is as follows:
E) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
F) JOINT VENTURE ACCOUNTING
The Partnership has adopted the proportionate consolidation method of accounting for joint venture properties. The Partnership's proportionate interest in the joint venture's assets, liabilities, revenues, expenses and cash flows are combined on a line-by-line basis with the Partnership's own assets, liabilities, revenues, expenses and cash flows. All intercompany accounts and transactions have been eliminated in consolidation.
Proportionate consolidation is utilized by the Partnership due to the fact that the ownership of joint venture properties, in substance, is not subject to joint control. The managing General Partners of the sole General Partner of the NTS sponsored partnerships which have formed joint ventures are substantially the same. As such, decisions regarding financing, development, sale or operations do not require the approval of different partners. Additionally, the joint venture properties are in the same business/industry as their respective joint venture partners and their asset, liability, revenue and expense accounts correspond with the accounts of such partner. It is the belief of the General Partner of the Partnership that the financial statement disclosures resulting
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from proportionate consolidation provides the most meaningful presentation of assets, liabilities, revenues, expenses and cash flows given the commonality of the Partnership's operations.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
G) CASH AND EQUIVALENTS - RESTRICTED
Cash and equivalents - restricted represents funds received for residential security deposits, funds which have been escrowed with mortgage companies for property taxes in accordance with the loan agreements, funds reserved by the Partnership for the repurchase of limited Partnership Units (December 31, 1997) and funds reserved by the Partnership for the purchase of limited partnership Units through the Tender Offer (December 31, 1998 - See Note 5).
H) INVESTMENT SECURITIES
Investment securities represent investments in Certificates of Deposit or securities issued by the U.S. Government with initial maturities of greater than three months. The Partnership intends to hold the securities until maturity. During 1998, 1997 and 1996, the Partnership sold no investment securities.
At December 31, 1998, the Partnership held no investment securities with initial maturities greater than three months.
The following provides details regarding the investments held at December 31, 1997:
I) BASIS OF PROPERTY AND DEPRECIATION
Land, building and amenities are stated at cost to the Partnership. Costs directly associated with the acquisition, development and construction of a project are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of the assets which are 30 years for land improvements, 5-30 years for buildings and improvements and 5-7 years for amenities.
Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
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Assets to be Disposed Of, specifies circumstances in which certain long-lived assets must be reviewed for impairment. If such review indicates that the carrying amount of an asset exceeds the sum of its expected future cash flows, the asset's carrying value must be written down to fair value. Application of this standard during the years ended December 31, 1998, 1997 and 1996 did not result in an impairment loss.
For financial reporting purposes, the income from commercial leases is recognized on a straight-line basis over the lease term. There was no accrued income connected with commercial leases as of December 31, 1998 and 1997 due to the renewal lease having no scheduled and specified rent increases. All commissions paid to commercial property leasing agents are deferred and amortized on a straight-line basis over the applicable lease term.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
K) ADVERTISING
The Partnership expenses advertising-type costs as incurred. Advertising expense was immaterial to the Partnership during the years ended December 31, 1998, 1997 and 1996.
L) STATEMENTS OF CASH FLOWS
For purposes of reporting cash flows, cash and equivalents include cash on hand and short-term, highly liquid investments with initial maturities of three months or less.
M) RECLASSIFICATIONS OF 1997 AND 1996 FINANCIAL STATEMENTS
Certain reclassifications have been made to the December 31, 1997 and 1996 financial statements to conform with December 31, 1998 classifications. These reclassifications have no effect on previously reported operations.
2. CONCENTRATION OF CREDIT RISK
NTS-Properties VII, Ltd. owns and operates, through a joint venture, a commercial property in Louisville, Kentucky. The sole tenant which occupies 100% of the property is a business which has operations in the Louisville area. The Partnership also owns and operates residential properties in Louisville and Lexington, Kentucky. The apartment unit is generally the principal residence of the tenant.
3. INVESTMENT IN BLANKENBAKER BUSINESS CENTER JOINT VENTURE
On December 28, 1990, the Partnership entered into a Joint Venture Agreement with NTS-Properties Plus Ltd., an affiliate of the General Partner of the Partnership, to complete the development of Blankenbaker Business Center 1A, a business center located in Louisville, Kentucky. NTS-Properties Plus Ltd. contributed Blankenbaker Business Center 1A together with improvements and personal property (Real Property) to the capital of the Joint Venture, subject to mortgage indebtedness in the amount of $4,715,000. The agreed upon net fair market value of NTS-Properties Plus Ltd.'s capital contribution was $1,700,000, being the appraised value of the Real Property ($6,415,000) reduced by the $4,715,000 mortgage. The Partnership contributed $450,000 which was used for additional tenant improvements to the Real Property and made a capital contribution to the Joint Venture of $325,000 to purchase a 2.49 acre parking lot that was leased from an affiliate of the general partner as described in NTS-Properties Plus Ltd.'s Prospectus. NTS-
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Properties Plus Ltd. transferred to the Joint Venture its option to purchase the parking lot, and the Joint Venture exercised the option.
The use of the parking lot is a provision of the tenant's lease agreement with the business center. By purchasing the parking lot, the Joint Venture's annual operating expenses were reduced approximately $35,000. The purchase price of the parking lot was determined by an independent appraisal.
On August 16, 1994, the Blankenbaker Business Center Joint Venture amended its joint venture agreement to admit NTS-Properties IV (an affiliate of the General Partner of the Partnership) to the Joint Venture. In accordance with the Joint Venture Agreement Amendment, NTS-Properties IV contributed $1,100,000 and the Partnership contributed $500,000. The need for additional capital by the Joint Venture was a result of the lease renewal and expansion which was signed April 28, 1994 between the Joint Venture and Prudential Service Bureau, Inc. [currently known as Sykes Health Plan Service Bureau, Inc. ("Sykes")]. The lease expanded Sykes' leased space by approximately 15,000 square feet and extended its lease term through July 2005.
3. INVESTMENT IN BLANKENBAKER BUSINESS CENTER JOINT VENTURE - CONTINUED
Approximately 12,000 square feet of the expansion was into new space which had to be constructed on the second level of the existing business center. With this expansion, Sykes occupied 100% of the business center (approximately 101,000 square feet - ground and second floor). The tenant finish and leasing costs connected with the lease renewal and expansion were approximately $1,400,000.
In order to calculate the revised joint venture percentage interests, the assets of the Joint Venture were revalued in connection with the admission of NTS-Properties IV as a joint venture partner and the additional capital contributions. The value of the Joint Venture's assets immediately prior to the additional capital contributions was $6,764,322 and its outstanding debt was $4,650,042, with net equity being $2,114,280. The difference between the value of the Joint Venture's assets and the value at which they were carried on the books of the Joint Venture has been allocated to the Partnership and NTS-Properties Plus Ltd. in determining each Joint Venture partner's percentage interest. The Partnership's interest in the Joint Venture remained at 31%. NTS-Properties Plus Ltd.'s interest in the Joint Venture decreased from 69% to 39% as a result of the capital contributions by NTS-Properties IV and the Partnership. NTS-Properties IV obtained a 30% interest in the Joint Venture as a result of its capital contribution.
Net income or loss is to be allocated based on the respective contribution of each partnership as of the end of each calendar quarter. The Partnership's ownership share was 31% at December 31, 1998.The Partnership's share of the joint venture's revenue was $292,734 (1998), $293,939 (1997) and $293,796 (1996). The Partnership's share of the joint venture's expenses was $328,675 (1998), $348,783 (1997) and $342,947 (1996).
4. INTEREST REPURCHASE RESERVE
Pursuant to Section 16.4 of the Partnership's Amended and Restated Agreement of Limited Partnership, the Partnership established an Interest Repurchase Reserve in December 1995. During the years ended December 31, 1998, 1997 and 1996, the Partnership funded $7,242, $38,918 and $121,270, respectively, to the reserve. Through December 31, 1998, the Partnership has repurchased a total of 62,529 Units for $295,080 at a price ranging from $4.00 to $6.00 per Unit. The Offering price per Unit was established by the General Partner in its sole discretion and does not purport to represent the fair market
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value or liquidation value of the Units. Repurchased Units have been retired by the Partnership, thus increasing the percentage of ownership of each remaining limited partner investor. The Interest Repurchase Reserve was funded from cash reserves. The funds remaining in the Interest Repurchase Reserve at the commencement of the Tender Offer (discussed below) were returned to unrestricted cash for utilization in the Partnership's operations.
5. TENDER OFFER
On December 7, 1998, the Partnership and ORIG, LLC, an affiliate of the Partnership, commenced a Tender Offer to purchase up to 20,000 of the Partnership's limited partnership Units at a price of $6.00 per Unit. Although the Partnership and ORIG, LLC believe that this price is appropriate, the price of $6.00 per Unit may not equate to the fair market value or the liquidation value of the Unit, and is less than the book value per Unit as of the date of the Offering. The amount of funds required by the Partnership to fund the Offer is estimated to be approximately $78,000 ($60,000 to purchase 10,000 Interests plus approximately $18,000 for its proportionate share of the expenses associated with administering the Offer). The Offer stated that the Partnership will purchase the first 10,000 Units tendered and will fund its purchases and its portion of the expenses from cash reserves. If more than 20,000 Units are tendered, the Partnership and ORIG, LLC may choose to acquire the additional Units on the same terms. Otherwise, tendered Units will be purchased on a pro rata basis up to 20,000. Units that are acquired by the Partnership will be retired. Units
5. TENDER OFFER - CONTINUED
that are acquired by ORIG, LLC will be held by it. The General Partner, NTS- Properties Associates VII, does not intend to participate in the Tender Offer.
Under the terms of the Offer, the Offer expired on March 6, 1999. As of that date, a total of 25,794 Units were tendered pursuant to the Offer. The Offerors exercised their right under the terms of the Offer to purchase more than 20,000 Units and all 25,794 Units tendered were accepted by the Offerors, without proration. The Partnership repurchased 10,000 Units and ORIG, LLC purchased 15,794 Units.
6. LAND, BUILDINGS AND AMENITIES
The following schedule provides an analysis of the Partnership's investment in property held for lease as of December 31:
7. MORTGAGES PAYABLE
Mortgages payable as of December 31 consist of the following:
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The mortgages are payable in monthly aggregate installments of $51,047 includes principal, interest and property taxes.
Scheduled maturities of debt are as follows:
7. MORTGAGES PAYABLE - CONTINUED
Based on the borrowing rates currently available to the Partnership for mortgages with similar terms and average maturities, the fair value of long-term debt is approximately $5,300,000.
The 1997 write-off of unamortized loan costs (recorded as an extraordinary item) relates to loan costs associated with the Park Place Apartments Phase II's notes payable. The unamortized loan costs were expensed due to the fact that the notes were retired in 1997 prior to their maturity (October 5, 2002) as a result of permanent financings obtained by the Partnership in October 1997.
8. RENTAL INCOME UNDER OPERATING LEASES
The following is a schedule of minimum future rental income on noncancellable operating leases as of December 31, 1998:
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9. RELATED PARTY TRANSACTIONS
Property management fees of $101,354 (1998), $106,264 (1997) and $104,248 (1996)were paid to NTS Development Company, an affiliate of the General Partner. The fee is equal to 5% of gross revenues from the residential properties and 6% of gross revenues from the commercial property pursuant to an agreement with the Partnership. Also permitted by the partnership agreement, NTS Development Company will receive a repair and maintenance fee equal to 5.9% of costs incurred which relate to capital improvements. The Partnership has incurred $1,410 (1998) and $3,040 (1997) as repair and maintenance fee and has capitalized these costs as a part of land, buildings and amenities. There was no similar fee incurred during 1996. The Partnership also was charged the following amounts from affiliates of the General Partner for the years ended December 31, 1998, 1997 and 1996. These charges include items which have been expensed as operating expenses affiliated or as professional and administrative expenses - affiliated and items which have been capitalized as other assets or as land, buildings and amenities.
These charges were as follows:
10. SEGMENT REPORTING
The Partnership adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, during the fourth quarter of 1998. SFAS No. 131 established standards for reporting information about operating segments in annual financial statements and requires selected information about operating segments in interim financial reports issued to limited partners. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The standard also allows entities to aggregate operating segments into a single segment if the segments are similar in each of the six criteria set forth in SFAS No. 131. The Partnership's chief operating decision-maker is the General Partner.
The Partnership's reportable operating segments include Residential and Commercial real estate operations. The Residential operations represent Partnership's ownership and operating results relative to apartment complexes known as the Park at the Willows and Park Place Apartments Phase II. The Commercial operations represent the Partnership's ownership and operating results relative to suburban commercial office space known as Blankenbaker Business Center 1A.
The financial information of the operating segments have been prepared using
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a management approach, which is consistent with the basis and manner in which the Partnership management internally disaggregates financial information for the purposes of assisting in making internal operating decisions. The Partnership evaluates performance based on stand-alone operating segment net income.
10. SEGMENT REPORTING - CONTINUED
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10. SEGMENT REPORTING - CONTINUED
A reconciliation of the totals reported for the operating segments to the applicable line items in the consolidated financial statements is necessary given amounts recorded at the Partnership level and not allocated to the operating properties for internal reporting purposes.
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(1) THESE AMOUNTS PRIMARILY REPRESENT THE MORTGAGES HELD BY THE PARTNERSHIP, SECURED BY THE ASSETS OF THE OPERATING SEGMENTS.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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PART III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Because the Partnership is a limited partnership and not a corporation, it has no directors or officers as such. Management of the Partnership is the responsibility of the General Partner, NTS-Properties Associates VII. The Partnership has entered into a management contract with NTS Development Company, an affiliate of the General Partner, to provide property management services.
The General Partners of NTS-Properties Associates VII are as follows:
J. D. Nichols
Mr. Nichols (age 57) is the managing General Partner of NTS-Properties Associates VII and is Chairman of the Board of NTS Corporation (since 1985) and NTS Development Company (since 1977).
Richard L. Good
Mr. Good (age 59), Vice Chairman of NTS Corporation and of NTS Development Company and Chairman of the Board of NTS Securities, Inc., joined the Manager in January 1985. From 1981 through 1984, he was Executive Vice-President of Jacques-Miller, Inc., a real estate syndication, property management and financial planning firm in Nashville, Tennessee.
NTS Capital Corporation
NTS Capital Corporation is a Kentucky Corporation formed in October 1979. J.D. Nichols is Chairman of the Board and the sole director of NTS Capital Corporation.
The Manager of the Partnership's Properties is NTS Development Company, the executive officers and/or directors of which are Messrs. J.D. Nichols, Richard L. Good and Brian F. Lavin.
Brian F. Lavin
Mr. Lavin (age 45), President of NTS Corporation and NTS Development Company joined the Manager in June 1997. Prior to joining NTS, Mr. Lavin served as President of the Residential Division of Paragon Group, Inc., and as a Vice President of Paragon's Midwest Division. In this capacity, he directed the development, marketing, leasing and management operations for the firms expanding portfolios. Mr. Lavin attended the University of Missouri where he received his Bachelor's Degree in Business Administration. He has served as a Director of the Louisville Apartment Association. He is a licensed Kentucky Real Estate Broker and Certified Property Manager. Mr. Lavin is a member of the Institute of Real Estate Management, and council member of the Urban Land Institute. He currently serves on the University of Louisville Board of Overseers and is on the Board of Directors of the National Multi-Housing Council and the Louisville Science Center.
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Item 11.
Item 11. MANAGEMENT REMUNERATION AND TRANSACTIONS
The officers and/or directors of the corporate General Partner receive no direct remuneration in such capacities. The partnership is required to pay a property management fee based on gross rentals to NTS Development Company. The Partnership is also required to pay to NTS Development Company a repair and maintenance fee on costs related to specific projects. In addition, NTS Development Company provides certain other services to the Partnership. See Note 9 to the financial statements which sets forth transactions with affiliates of the General Partner for the years ended December 31, 1998, 1997 and 1996.
The General Partner is entitled to receive cash distributions and allocations of profits and losses from the Partnership. See Note 1C to the financial statements which describes the methods used to determine income allocations and cash distributions.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The General Partner is NTS-Properties Associates VII, a Kentucky Limited Partnership, 10172 Linn Station Road, Louisville, Kentucky 40223. The Partners of the General Partner and their total respective interests in NTS-Properties Associates VII are as follows:
The remaining 46.95% interests are owned by various limited partners of NTS- Properties Associates VII.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Property management fees of $101,354 (1998), $106,264 (1997)and $104,248 (1996) were paid to NTS Development Company, an affiliate of the General Partner. The fee is equal to 5% of gross revenues from residential properties and 6% of gross revenues from the commercial property pursuant to an agreement with the Partnership. Also permitted by the partnership agreement, NTS Development Company will receive a repair and maintenance fee equal to 5.9% of costs incurred which relate to capital improvements. The Partnership has incurred $1,410 (1998) and $3,040 (1997) as a repair and maintenance fee and has capitalized this cost as a part of land, buildings and amenities. There was no similar fee incurred during 1996. The partnership was also charged the following amounts from NTS Development Company for the years ended December 31, 1998, 1997 and 1996. These charges include items which have been expensed as operating expenses - affiliated or as professional and administrative expenses - affiliated and items which have been capitalized as other assets or as land, buildings and amenities.
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Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - CONTINUED
These charges were as follows:
There are no other agreements or relationships between the Partnership, the General Partner and its affiliates than those previously discussed.
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PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
1. Financial statements
The financial statements for the period through December 31, 1998, together with the report of Arthur Andersen LLP dated March 12 1999, appear in Item 8.
4. Reports on Form 8-K
None.
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(A) First mortgage held by an insurance company.
(B) Represents NTS-Properties VII, Ltd.'s decreased interest in Blankenbaker Business Center 1A as a result of capital contributions made by the Partnership and NTS-Properties IV to the Blankenbaker Business Center Joint Venture in 1994.
(C) Aggregate cost of real estate for tax purposes is $13,807,264.
(D) Depreciation is computed using the straight-line method over the estimated useful lives of the assets which are 10-30 years for land improvements, 5-30 years for buildings and improvements and 5-30 years for amenities.
(E) Reconciliation net of accumulated depreciation to consolidated financial statements:
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NTS-PROPERTIES VII, LTD.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(a) The additions to real estate on this schedule will differ from the expenditures for land, buildings and amenities on the Statements of Cash Flows as a result of minor changes in the Partnership's joint venture investment ownership percentages. Changes that may occur in the ownership percentages are less than one percent.
(b) The additions charged to accumulated depreciation on this schedule will differ from the depreciation and amortization on the Statements of Cash Flows due to the amortization of loan costs.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, NTS-Properties VII, Ltd. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NTS-PROPERTIES VII, LTD. ------------------------------ (Registrant)
BY: NTS-Properties Associates VII, General Partner BY: NTS Capital Corporation, General Partner
/s/ Brian F. Lavin ------------------------------ Brian F. Lavin President
Date: March 31, 1999
Pursuant to the requirements of the Securities and Exchange Act of 1934, this Form 10-K has been signed below by the following persons on behalf of the registrant in their capacities and on the date indicated above.
The Partnership is a limited partnership and no proxy material has been sent to the limited partners.