UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-Q

                                   (Mark One)

[x] QUARTERLY REPORT PERSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
    ACT OF 1934

     For the quarterly period ended      September 30, 1999
                                   --------------------------------------------

                                       OR

[ ] TRANSITION REPORT PERSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

         For the transition period from               to
                                       --------------   -----------------------

         Commission File Number                 0-17589
                                  ----------------------------------------------



                            NTS-PROPERTIES VII, LTD.
--------------------------------------------------------------------------------
              (Exact name of registrants specified in its charter)


          Florida                                        61-111923
-----------------------------                        --------------------------
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                       Identification No.)


   10172 Linn Station Road
   Louisville, Kentucky                                    40223
-----------------------------                        --------------------------
Address of principal executive                           (Zip Code)
offices

Registrant's telephone number,
including area code:                                   (502) 426-4800
                                                     --------------------------


                                 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,  and (2) has been subject to such filing  requirements
for the past 90 days.

                                                                YES__X__ NO_____

Exhibit Index: See page 19
Total Pages: 20


<PAGE>


                                TABLE OF CONTENTS
                                -----------------

                                                                          Pages
                                                                          -----

                                     PART I
                                     ------

Item 1.     Financial Statements

            Balance Sheets and Statement of Partners' Equity
              as of September 30, 1999 and December 31, 1998                   3

            Statements of Operations
              For the three months and nine months ended
              September 30, 1999 and 1998                                      4

            Statements of Cash Flows
              For the nine months ended September 30, 1999 and 1998            5

            Notes To Financial Statements                                   6-11

Item 2.     Management's Discussion and Analysis of Financial
              Condition and Results of Operations                          12-18

Item 3. Quantitative and Qualitative Disclosures About Market Risk            18


                                     PART II
                                     -------

Item 1. Legal Proceedings                                                     19
Item 2. Changes in Securities                                                 19
Item 3. Defaults upon Senior Securities                                       19
Item 4. Submission of Matters to a Vote of Security Holders                   19
Item 5. Other Information                                                     19
Item 6. Exhibits and Reports on Form 8-K                                      19

Signatures                                                                    20



                                      2

<PAGE>

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
         --------------------
<TABLE>
                            NTS-PROPERTIES VII, LTD.
                            ------------------------

                BALANCE SHEETS AND STATEMENT OF PARTNERS' EQUITY
                ------------------------------------------------
<CAPTION>

                                      As of             As of
                               September 30, 1999 December 31, 1998*
                               ------------------ -----------------
ASSETS
------
<S>                                  <C>           <C>
Cash and equivalents                 $   456,274   $   398,001
Cash and equivalents - restricted        115,529       100,427
Investment securities                       --            --
Accounts receivable                        6,798          --
Land, buildings and amenities, net     9,757,124    10,036,720
Other assets                             123,154       130,828
                                     -----------   -----------

                                     $10,458,879   $10,665,976
                                     ===========   ===========

LIABILITIES AND PARTNERS' EQUITY
--------------------------------

Mortgages payable                    $ 4,914,670   $ 5,088,213
Accounts payable                          74,675        57,319
Distributions payable                     28,573        29,078
Security deposits                         30,799        28,401
Other liabilities                         91,099        41,265
                                     -----------   -----------

                                       5,139,816     5,244,276



Partners' equity                       5,319,063     5,421,700
                                     -----------   -----------

                                     $10,458,879   $10,665,976
                                     ===========   ===========
</TABLE>

<TABLE>
<CAPTION>
                                    Limited            General
                                    Partners           Partner        Total
                                    --------           -------        -----
PARTNERS' EQUITY
----------------
<S>                               <C>             <C>             <C>
Capital contributions, net of
 offering costs                   $ 10,935,700    $        100    $ 10,935,800
Net income (loss) - prior years     (2,645,666)        (26,723)     (2,672,389)
Net income - current year               42,648             431          43,079
Cash distributions declared to
 date                               (2,606,024)        (26,323)     (2,632,347)
Repurchase of limited
 partnership Units                    (355,080)           --          (355,080)
                                   ------------    ------------    ------------

Balances at September 30, 1999    $  5,371,578    $    (52,515)   $  5,319,063
                                   ============    ============    ============
</TABLE>

     * Reference is made to the audited financial statements in the Form 10-K as
       filed with the Commission on March 31, 1999.


                                      3


<PAGE>

<TABLE>
                            NTS-PROPERTIES VII, LTD.
                            ------------------------


                            STATEMENTS OF OPERATIONS
                            ------------------------
<CAPTION>

                                    Three Months Ended         Nine Months Ended
                                       September 30,             September 30,
                                    ------------------         -----------------

                                       1999        1998         1999          1998
                                   ----------   ----------   ----------   -----------

REVENUES:
---------
<S>                                <C>          <C>          <C>          <C>
Rental income                      $  514,892   $  494,661   $1,460,339   $1,450,721
Interest and other income               4,505        7,342       17,602       20,543
                                   ----------   ----------   ----------   ----------

                                      519,397      502,003    1,477,941    1,471,264

EXPENSES:
---------
Operating expenses                    118,014      120,998      301,766      346,890
Operating expenses - affiliated        65,684       67,113      197,637      192,275
Write-off of unamortized land
 improvements and amenities              --           --           --         10,743
Interest expense                       94,775       99,540      286,203      297,781
Management fees                        27,728       25,656       76,514       75,648
Real estate taxes                      27,136       24,875       81,407       75,803
Professional and administrative
 expenses                              31,454       15,032       79,956       46,423
Professional and administrative
 expenses - affiliated                 17,614       20,610       53,549       63,990
Depreciation and amortization         115,989      119,656      357,830      361,349
                                   ----------   ----------   ----------   ----------

                                      498,394      493,480    1,434,862    1,470,902
                                   ----------   ----------   ----------   ----------

Net income                         $   21,003   $    8,523   $   43,079   $      362
                                   ==========   ==========   ==========   ==========

Net income allocated to the
 limited partners                  $   20,793   $    8,438   $   42,648   $      358
                                   ==========   ==========   ==========   ==========

Net income per limited
 partnership Unit                  $     0.04   $     0.01   $     0.08   $     0.00
                                   ==========   ==========   ==========   ==========

Weighted average number of units      565,736      575,736      568,300      583,606
                                   ==========   ==========   ==========   ==========
</TABLE>

                                       4

<PAGE>

<TABLE>
                            NTS-PROPERTIES VII, LTD.
                            ------------------------

                            STATEMENTS OF CASH FLOWS
                            ------------------------
<CAPTION>

                                                   Nine Months Ended
                                                     September 30,
                                       -----------------------------------------
                                              1999                  1998
                                       -------------------  --------------------
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
<S>                                      <C>                   <C>
Net income                               $   43,079             $     362
Adjustments to reconcile net income
 to net cash provided by
 operating activities:
 Accrued interest on investment
  securities                                   --                   1,737
 Write-off of unamortized land
  improvements and amenities                   --                  10,743
 Depreciation and amortization              357,830               361,349
 Changes in assets and liabilities
  Cash and equivalents - restricted          44,898               (10,972)
  Accounts receivable                       (12,269)                 (735)
  Other assets                                8,651                 8,887
  Accounts payable - operating               17,356                16,512
  Security deposits                           2,398                (5,050)
  Other liabilities                          49,835                75,528
                                           ---------             ---------

 Net cash provided by operating
  activities                                511,778               458,361
                                           ---------             ---------

CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Additions to land, buildings and
 amenities                                  (73,745)             (113,083)
Purchase of investment securities              --                (200,000)
Maturity of investment securities              --                 536,392
                                           ---------             ---------

 Net cash provided by (used in)
  investing                                 (73,745)              223,309
                                           ---------             ---------

CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Cash and equivalents - restricted           (60,000)              127,650
Principal payments on mortages
 payable                                   (173,543)             (159,990)
Cash distributions                          (86,222)             (148,027)
Repurchase of limited partnership Units     (60,000)             (134,892)
Payment of loan costs                             5               (12,300)
                                           ---------             ---------

 Net cash used in financing activities     (379,760)             (327,559)
                                           ---------             ---------

 Net increase in cash and equivalents        58,273               354,111


CASH AND EQUIVALENTS, beginning of
 period                                     398,001               164,714
                                           ---------             ---------

CASH AND EQUIVALENTS, end of period       $ 456,274             $ 518,825
                                           =========             =========

Interest paid on a cash basis             $ 286,203             $ 299,432
                                           =========             =========
</TABLE>


                                       5

<PAGE>

                            NTS-PROPERTIES VII, LTD.
                            ------------------------

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

The financial  statements included herein should be read in conjunction with the
Partnership's 1998 Form 10-K as filed with the Securities Exchange Commission on
March 31, 1999. In the opinion of the General  Partner,  all  adjustments  (only
consisting of normal recurring  accruals) necessary for a fair presentation have
been made to the accompanying financial statements for the three months and nine
months ended September 30, 1999 and 1998.

1.   Concentration of Credit Risk
     ----------------------------

     During the three months ended March 31, 1999, SHPS, Inc., formerly known as
     Sykes Health Plan Services,  Inc.,  announced its intentions to consolidate
     its operations and to build its corporate headquarters in Jefferson County,
     Kentucky.  One of  SHPS,  Inc's  operations,  Sykes,  is  already  based in
     Louisville,  Kentucky  in  Blankenbaker  Business  Center  1A.  Due  to the
     expansion   of  SHPS,   Inc's   headquarters,   it  is  the   Partnership's
     understanding  that SHPS,  Inc.  does not intend to  continue to occupy the
     space at Blankenbaker Business Center 1A through the duration of its lease,
     July 2005. The Partnership's  proportionate share of the rental income from
     this property  accounted for approximately  15% of the Partnership's  total
     revenues for the nine months ended  September 30, 1999. The Partnership has
     not yet determined  the effect,  if any, on the  Partnership's  operations,
     given the fact Sykes is under lease until July 2005 and no official  notice
     of termination has been received.

2.   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  with  such
     mortgage  companies,   and  funds  reserved  by  the  Partnership  for  the
     repurchase of limited partnership Units.

3.   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  sold no  securities  during the three
     months and nine months ended September 30, 1999 or during the twelve months
     ended  December 31, 1998. The  Partnership  held no securities at September
     30, 1999 or at December 31, 1998.

4.   Basis of Property and Depreciation
     ----------------------------------

     Land, buildings and amenities are stated at cost to the Partnership.  Costs
     directly associated with the acquisition, development and construction of a
     project are capitalized.  Depreciation is computed using the  straight-line
     method over the  estimated  useful lives of the assets which are 5-30 years
     for land  improvements,  5-30 years for  buildings and  improvements,  5-30
     years for amenities and the applicable lease term for tenant improvements.

     Statement of Financial  Accounting Standards (SFAS) No. 121, Accounting for
     the  Impairment  of  Long-Lived  Assets  and for  Long-Lived  Assets  to be
     Disposed Of,  specifies  circumstances in which certain  long-lived  assets
     must be reviewed for impairment. If 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 periods ended September 30, 1999 and 1998 did not
     result in an impairment loss.

                                       6


<PAGE>

5.   Mortgages Payable
     -----------------

     Mortgages payable consist of the following:


                                            September 30,          December 31,
                                                1999                  1998
                                            -------------          ------------

     Mortgage  payable to an insurance
     company, bearing interest at a fixed
     rate of 7.37%, due October 15, 2012,
     secured by land and buildings.          $ 3,905,218            $ 3,987,830

     Mortgage  payable to an insurance
     company,  bearing interest at a fixed
     rate of 8.5%, due November 15, 2005,
     secured by land and buildings.            1,009,452              1,100,383
                                              ----------             ----------

                                             $ 4,914,670            $ 5,088,213
                                              ==========             ==========

     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 $4,862,000.

6.   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.  As of December 7, 1998 (the  commencement date of the
     Partnership's  First Tender Offer), 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 Interest  Repurchase  Reserve was funded from cash reserves.  The
     above offering price per Unit was established by the General Partner in its
     sole  discretion  and does not  purport  to  represent  the fair  market or
     liquidation  value  of the  Units.  The  funds  remaining  in the  Interest
     Repurchase Reserve at the commencement of the December 7, 1998 Tender Offer
     (discussed below) were returned to unrestricted cash for utilization in the
     Partnership's operations.

7.   Tender Offers
     -------------

     On December 7, 1998,  the  Partnership  and ORIG,  LLC, an affiliate of the
     Partnership,  (the  "bidders")  commenced a tender offer (the "First Tender
     Offer") to purchase up to 20,000 of the Partnership's  limited  partnership
     Units at a price of $6.00 per Unit.  The First Tender Offer  provided  that
     the  Partnership  would  purchase the first 10,000 Units tendered and would
     fund  its  purchases  and its  portion  of the  expenses,  associated  with
     administering  the First Tender  Offer,  from cash  reserves.  If more than
     10,000  Units were  tendered,  the  bidders  could  choose to  acquire  the
     additional  Units on the same  terms.  Otherwise,  tendered  Units would be
     purchased on a pro rata basis up to 20,000. Units that were acquired by the
     Partnership  would be retired.  Units that were acquired by ORIG, LLC would
     be held by it. The General Partner,  NTS-Properties Associates VII, did not
     participate in the First Tender Offer.

     Under the terms of the First Tender  Offer,  the First Tender Offer expired
     on March 6, 1999.  As of that date, a total of 25,794  Units were  tendered
     pursuant to the First Tender Offer. The bidders exercised their right under
     the terms of the First Tender Offer to purchase  more than 20,000 Units and
     all 25,794 Units tendered were accepted by the bidders  without  proration.
     The  Partnership  repurchased  10,000 Units and ORIG, LLC purchased  15,794
     Units.

                                       7

<PAGE>


7.   Tender Offers - Continued
     -------------------------

     On  September 2, 1999,  the  Partnership  and ORIG,  LLC,  (the  "bidders")
     commenced a second tender offer (the "Second  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  bidders   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  Units,  and is less  than the book
     value per Unit as of the date of the Second Tender Offer. The Second Tender
     Offer  provides that the  Partnership  will purchase the first 10,000 Units
     tendered  and will fund its  purchases  and its  portion  of the  expenses,
     associated with  administering  the Second Tender Offer from cash reserves.
     If more than 10,000 Units are  tendered,  ORIG,  LLC will purchase up to an
     additional  10,000  Units.  If more than  20,000  Units are  tendered,  the
     bidders may choose to acquire the additional Units on the same terms. Units
     that are  acquired  by the  Partnership  will be  retired.  Units  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 Second
     Tender  Offer.  The  Second  Tender  Offer's  initial  expiration  date was
     November 30, 1999.  The Second  Tender Offer was  subsequently  extended to
     December 15, 1999.

8.   Related Party Transactions
     --------------------------

     Property  management fees of $27,728 and $25,656 for the three months ended
     September 30, 1999 and 1998, respectively,  and $76,514 and $75,648 for the
     nine months ended September 30, 1999 and 1998,  respectively,  were paid to
     NTS Development  Company,  an affiliate of the General Partner.  The fee is
     paid  monthly  in an  amount  equal to 5% of the  gross  revenues  from the
     residential  properties  and 6% of the gross  revenues from the  commercial
     property pursuant to an agreement with the Partnership. Also pursuant to an
     agreement,  NTS  Development  Company will receive a repair and maintenance
     fee equal to 5.9% of costs incurred  which relate to capital  improvements.
     The  Partnership  has  incurred  $1,845 and $749 for the three months ended
     September  30, 1999 and 1998,  respectively,  and $4,295 and $1,719 for the
     nine months ended September 30, 1999 and 1998, respectively,  as repair and
     maintenance  fees,  and has  capitalized  these  costs  as  part  of  land,
     buildings and  amenities.  The  Partnership  was also charged the following
     amounts from NTS  Development  Company for the three months and nine months
     ended  September 30, 1999 and 1998.  These charges include items which have
     been  expensed as  operating  expenses -  affiliated  or  professional  and
     administrative  expenses - affiliated and items which have been capitalized
     as other assets or as land, buildings and amenities.

                          Three Months Ended               Nine Months Ended
                             September 30,                    September 30,
                         ---------------------           ---------------------

                           1999        1998               1999          1998
                         --------     --------           --------      -------
     Leasing            $  8,827     $ 11,575           $ 30,049      $ 36,098
     Administrative       36,855       26,543            114,710        81,786
     Property manager     38,666       49,089            106,202       144,766
     Other                (1,050)         517                226         1,137
                         --------     --------           --------      -------

                        $ 83,298     $ 87,724           $251,187      $263,787
                         ========     ========           ========      =======

9.   Segment Reporting
     -----------------

     The Partnership's  reportable  operating  segments include  residential and
     commercial real estate operations. The residential operations represent the
     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.

                                       8

<PAGE>
9.   Segment Reporting - Continued
     -----------------------------

     The financial information of the operating segments has been prepared using
     a management  approach,  which is  consistent  with the basis and manner in
     which  the  Partnership's  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.
<TABLE>
                       Nine Months Ended September 30, 1999
<CAPTION>
                      Residential   Commercial     TOTAL
                      -----------   ----------     -----
<S>                    <C>          <C>          <C>
Rental income          $1,239,560   $  220,779   $1,460,339
Other income                7,068            7        7,075
                       ----------   ----------   ----------

Total net revenues      1,246,628      220,786    1,467,414
                       ==========   ==========   ==========

Operating expenses        467,653       31,750      499,403
Interest expense             --         67,612       67,612
Management fees            63,596       12,918       76,514
Real estate taxes          68,130       13,277       81,407
Depreciation expense      279,379       68,707      348,086
                       ----------   ----------   ----------

Net income (loss)      $  367,870   $   26,522   $  394,392
                       ==========   ==========   ==========
</TABLE>
<TABLE>
                                Nine Months Ended September 30, 1998
<CAPTION>
                               Residential   Commercial     TOTAL
                               -----------   ----------     -----
<S>                             <C>          <C>          <C>
Rental income                   $1,232,628   $  218,093   $1,450,721
Other income                         6,049         --          6,049
                                ----------   ----------   ----------

Total net revenues               1,238,677      218,093    1,456,770
                                ==========   ==========   ==========

Operating expenses                 502,875       36,295      539,170
Write off of unamortized loan
improvements and amenities          10,743         --         10,743
Interest expense                      --         74,480       74,480
Management fees                     62,237       13,411       75,648
Real estate taxes                   61,586       14,217       75,803
Depreciation expense               284,944       68,707      353,651
                                ----------   ----------   ----------

Net income (loss)               $  316,292   $   10,983   $  327,275
                                ==========   ==========   ==========
</TABLE>
<TABLE>
                                       Three Months Ended September 30, 1999
<CAPTION>
                                Residential   Commercial   TOTAL
                                -----------   ----------   -----
<S>                                <C>        <C>        <C>
Rental income                      $443,241   $ 71,651   $514,892
Other income                          1,069       --        1,069
                                   --------   --------   --------

Total net revenues                  444,310     71,651    515,961
                                   ========   ========   ========

Operating expenses                  173,157     10,541    183,698
Interest expense                       --       21,896     21,896
Management fees                      23,525      4,203     27,728
Real estate taxes                    22,710      4,426     27,136
Depreciation expense                 89,385     22,902    112,287
                                   --------   --------   --------

Net income (loss)                  $135,533   $  7,683   $143,216
                                   ========   ========   ========
</TABLE>
                                       9

<PAGE>
9. Segment Reporting - Continued
   -----------------------------
<TABLE>
                      Three Months Ended September 30, 1998
<CAPTION>
                              Residential Commercial   TOTAL
                              ----------------------   -----
<S>                             <C>        <C>        <C>
Rental income                   $420,097   $ 74,564   $494,661
Other income                       3,459       --        3,459
                                --------   --------   --------

Total net revenues               423,556     74,564    498,120
                                ========   ========   ========

Operating expenses               175,246     12,865    188,111
Write-off of unamortized loan
improvements and amenities          --         --         --
Interest expense                    --       24,401     24,401
Management fees                   21,177      4,479     25,656
Real estate taxes                 20,437      4,438     24,875
Depreciation expense              94,504     22,902    117,406
                                --------   --------   --------

Net income (loss)               $112,192   $  5,479   $117,671
                                ========   ========   ========
</TABLE>
      A reconciliation of the totals reported for the operating  segments to the
      applicable  line items in the  consolidated  financial  statements for the
      three  months  and  nine  months  ended  September  30,  1999  and 1998 is
      necessary  given  amounts  recorded  at  the  Partnership  level  and  not
      allocated to the operating properties for internal reporting purposes.
<TABLE>
<CAPTION>
                                                      Nine Months Ended
                                                         September 30,
                                                   -------------------------

                                                      1999           1998
                                                   ----------     ----------
NET REVENUES
------------
<S>                                               <C>            <C>
Total revenues for reportable segments            $ 1,467,414    $ 1,456,770
Other income for partnership                           10,527         14,494
Eliminations                                             --             --
                                                   ----------     ----------

Total consolidated net revenues                   $ 1,477,941    $ 1,471,264
                                                   ==========     ==========
INTEREST EXPENSE
----------------
Interest expense for reportable segments          $    67,612    $    74,480
Interest expense for partnership                      218,591        223,301
                                                   ----------     ----------

Total interest expense                            $   286,203    $   297,781
                                                   ==========     ==========
DEPRECIATION AND AMORTIZATION
-----------------------------
Total depreciation and amortization for
 reportable segments                              $   348,086    $   353,651
Depreciation and amortization for
 partnership                                           21,508         19,464
Eliminations                                          (11,764)       (11,766)
                                                   -----------    -----------

Total depreciation and amortization               $   357,830    $   361,349
                                                   ===========    ===========
NET INCOME (LOSS)
-----------------
Total net income (loss) for reportable segments   $   394,392    $   327,275
Net income (loss) for partnership                    (336,554)      (327,695)
Eliminations                                          (14,759)           782
                                                   -----------    -----------

Total net income (loss)                           $    43,079    $       362
                                                   ===========    ===========
</TABLE>
                                       10

<PAGE>


9. Segment Reporting - Continued
   -----------------------------

<TABLE>
<CAPTION>
                                            Three Months Ended
                                               September 30,
                                           ----------------------

                                              1999         1998
                                           ---------    ---------
NET REVENUES
------------
<S>                                        <C>          <C>
Total revenues for reportable segments     $ 515,961    $ 498,120
Other income for partnership                   3,436        3,883
Eliminations                                    --           --
                                           ---------    ---------

Total consolidated net revenues            $ 519,397    $ 502,003
                                           =========    =========

INTEREST EXPENSE
----------------
Interest expense for reportable segments   $  21,896    $  24,401
Interest expense for partnership              72,879       75,139
                                           ---------    ---------

Total interest expense                     $  94,775    $  99,540
                                           =========    =========

DEPRECIATION AND AMORTIZATION
-----------------------------
Total depreciation and amortization for
 reportable segments                       $ 112,287    $ 117,406
Depreciation and amortization for
 partnership                                   7,624        6,172
Eliminations                                  (3,922)      (3,922)
                                           ---------    ---------

Total depreciation and amortization        $ 115,989    $ 119,656
                                           =========    =========

NET INCOME (LOSS)
-----------------
Total net income (loss) for reportable
 segments                                  $ 143,216    $ 117,671
Net income (loss) for partnership           (118,453)    (107,590)
Eliminations                                  (3,760)      (1,558)
                                           ---------    ---------

Total net income (loss)                    $  21,003    $   8,523
                                           =========    =========
</TABLE>


                                       11

<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations
         -------------

Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations  ("MD&A") is  structured  in four major  sections.  The first section
provides  information  related to  occupancy  levels and rental and other income
generated  by the  Partnership's  properties.  The  second  analyzes  results of
operations on a consolidated basis. The final sections address consolidated cash
flows and financial  condition.  Discussion of certain market risks also follow.
MD&A should be read in conjunction  with the financial  statements in Item 1 and
the cautionary statements below.

Cautionary Statements
---------------------

Some  of  the  statements  included  in  this  Item 2 may  be  considered  to be
"forward-looking  statements" since such statements relate to matters which have
not yet occurred.  For example,  phrases such as "the Partnership  anticipates,"
"believes"  or   "expects,"   indicate  that  it  is  possible  that  the  event
anticipated,  believed or expected  may not occur.  Should such event not occur,
then the result which the Partnership  expected also may not occur or occur in a
different  manner,  which may be more or less favorable to the Partnership.  The
Partnership does not undertake any obligations to publicly release the result of
any revisions to these  forward-looking  statements  that may be made to reflect
any future events or circumstances.

Any  forward-looking  statements  included in MD&A, or elsewhere in this report,
which reflect management's best judgment,  based on factors known, involve risks
and uncertainties. Actual results could differ materially from those anticipated
in any  forward-looking  statements as a result of a number of factors including
but not  limited  to those  discussed  below.  Any  forward-looking  information
provided by the  Partnership  pursuant to the safe harbor  established by recent
securities legislation should be evaluated in the context of these factors.

The  Partnership's  principal  activity  is  the  leasing  and  management  of a
commercial business center and apartment complexes. If Sykes Health Plan Service
Bureau, Inc. ("Sykes"), the tenant that occupies 100% of the business center, or
a large number of apartment  lessees default on their lease,  the  Partnership's
ability to make  payments  due under its debt  agreements,  payment of operating
costs and other  partnership  expenses  would be directly  impacted.  A lessee's
ability to make  payments are subject to risks  generally  associated  with real
estate,  many of which are beyond  the  control  of the  Partnership,  including
general or local economic conditions,  competition,  interest rates, real estate
tax rates, other operating expenses and acts of God.

                                       12


<PAGE>
Results of Operations
---------------------

The occupancy levels at the  Partnership's  properties as of September 30 were
as follows:
                                                1999                 1998
                                               ------               ------
Wholly-owned Properties
-----------------------

The Park at the Willows                          90%                  88%

Park Place Apartments Phase II                   92%                  86%

Property Owned in Joint Venture with NTS-
-----------------------------------------
Properties IV and NTS-Properties Plus Ltd.
------------------------------------------
(Ownership % at September 30, 1999)
-----------------------------------

Blankenbaker Business Center 1A (31%)           100%                 100%

The  average  occupancy levels at the Partnership's  properties during the three
months and nine months ended September 30 were as follows:

                                       Three Months             Nine Months
                                          Ended                    Ended
                                       September 30,           September 30,
                                   ---------------------    --------------------
                                     1999         1998        1999        1998
                                   --------     --------    --------    --------
     Wholly-owned Properties
     -----------------------

     The Park at the Willows          89%          90%         91%          91%

     Park Place Apartments Phase II   91%          85%         86%          84%

     Property owned in Joint Venture
     -------------------------------
     with NTS-Properties IV and NTS-
     -------------------------------
     Properties Plus, LTD. (Ownership
     --------------------------------
     % at September 30, 1999)
     ------------------------

     Blankenbaker Business Center 1A
     (31%)                           100%         100%        100%         100%

Rental  and  other income  generated  by the  Partnership's  properties  for the
three months and nine months ended September 30, 1999 and 1998 was as follows:

                                         Three Months Ended    Nine Months Ended
                                            September 30,        September 30,
                                           1999       1998      1999      1998
                                         --------   --------  --------  --------
 Wholly-owned Properties
 -----------------------

 The Park at the Willows                 $ 83,292   $ 93,809  $256,704  $276,832

 Park Place Apartments Phase II          $361,019   $329,747  $989,924  $961,845

 Property owned in Joint Venture
 --------------------------------
 with NTS-Properties IV and
 --------------------------
 NTS-Properties Plus Ltd.
 -------------------------
 (Ownership % at September 30,
 -----------------------------
 1999)
 -----
 Blankenbaker Business Center 1A(31%)(1) $ 71,651   $74,564   $220,786  $218,093

(1) Revenues shown in this table represent the  Partnership's  share of revenues
generated  by  Blankenbaker  Business  Center 1A. The  Partnership's  percentage
interest in the joint  venture  was 31% during the three  months and nine months
ended September 30, 1999 and 1998.
                                       13
<PAGE>

Results of Operations - Continued
---------------------------------

If present  trends  continue,  the  Partnership  will be able to continue at its
current  level  of  operations  without  the need of any  additional  financing.
Current  occupancy  levels are considered  adequate to continue the operation of
the Partnership's properties. See the Liquidity and Capital Resources section of
Item 2 for a discussion  regarding the cash  requirements  of the  Partnership's
current debt financings.

The following is an analysis of material  changes in results of  operations  for
the  periods  ending  September  30,  1999 and 1998.  Items  that did not have a
material  impact on operations for the periods listed above have been eliminated
from this discussion.

Operating  expenses decreased  approximately  $3,000 or 2.5% and $45,000 or 13%,
respectively,  for the three months and nine months ended  September 30, 1999 as
compared  to the same  periods  in  1998.  This  decrease  is due  primarily  to
decreased  building  repairs and landscaping at Park Place  Apartments Phase II,
decreased exterior repairs at the Park at the Willows,  and decreased repair and
maintenance costs at Blankenbaker Business Center 1A.

The write-off of unamortized land  improvements and amenities of $10,743 for the
nine months ended  September 30, 1998 is the result of the  retirement of assets
that were not fully depreciated.  The retirements were the result of signage and
deck replacements at Park Place Apartments Phase II.

Interest  expense  decreased  approximately  $4,800  or 5%  and  $11,600  or 4%,
respectively,  for the three months and nine months ended  September 30, 1999 as
compared  to the same  periods  in  1998.  These  decreases  are the  result  of
decreased note payable balances due to monthly principal payments.

Professional and administrative expenses increased approximately $16,500 or 109%
and $33,500 or 72%,  respectively,  for the three  months and nine months  ended
September 30, 1999 as compared to the same periods in 1998.  These increases are
due primarily to increased legal costs,  outside  accounting  costs and printing
costs incurred for the Tender Offers.

Professional and administrative  expenses - affiliated  decreased  approximately
$3,000 or 14.5% and $10,500 or 16%, respectively,  for the three months and nine
months  ended  September  30,  1999 as  compared  to the  same  period  in 1998,
primarily  as a result of decreased  salary costs in the Finance and  Accounting
Departments due to temporary  vacancies in several  positions.  Professional and
administrative   expenses  -  affiliated  are  expenses  incurred  for  services
performed by employees of NTS Development  Company,  an affiliate of the General
Partner, on behalf of the Partnership.

Depreciation  is computed  using the  straight-line  method  over the  estimated
useful  lives of the assets  which are 10 - 30 years for land  improvements,  30
years for buildings, 5 - 30 years for building improvements and 5 - 30 years for
amenities.  The aggregate cost of the  Partnership's  properties for Federal tax
purposes is approximately $13,800,000.

                                       14

<PAGE>


Consolidated Cash Flows and Financial Condition
-----------------------------------------------

Cash flows provided by (used in):

                                             1999                   1998
                                          ----------             ----------

Operating activities                     $  511,778             $  458,361

Investing activities                        (73,745)               223,309

Financing activities                       (379,760)              (327,559)
                                          ----------             ----------

Net increase in cash and equivalents     $   58,273             $  354,111
                                          ==========             ==========


Net cash provided by operating activities increased approximately $54,000 or 12%
for the nine months ended  September  30, 1999 as compared to the same period in
1998.  The  increase in net cash  provided by  operating  activities  was driven
primarily by increased net income in 1999 as compared to 1998.

Net cash  provided  by (used in)  investing  activities  totaled  $(73,745)  and
$223,309 for the nine months ended  September  30, 1999 and 1998,  respectively.
The decrease in net cash  provided by investing  activities  for the nine months
ended  September  30, 1999 as compared to the same period in 1998 is primarily a
result of having no  investment  security  transactions  during the nine  months
ended September 30, 1999, offset slightly by reduced capital expenditures in the
nine months ended September 30, 1999 as compared to the same period in 1998.

Net cash used in financing activities totaled $379,760 and $327,559 for the nine
months ended September 30, 1999 and 1998, respectively. The increase in net cash
used in financing  activities  was  primarily due to slightly  higher  principal
pay-downs on debt and an increase in cash and  equivalents - restricted  for the
nine  months  ended  September  30, 1999 as compared to the same period in 1998,
offset by a lower  distribution  to partners and a lesser number of  partnership
units repurchased in the nine months ended September 30, 1999 as compared to the
same period in 1998.

During the nine months ended September 30, 1999 the  Partnership  used cash flow
from operations and cash on hand to pay a 1% (annualized)  cash  distribution of
$85,720  (1999) and a 1.30%  (annualized,  2% in the first quarter and 1% in the
second and third quarters) cash distribution of $116,680 (1998).  The annualized
distribution   rate  is  calculated  as  a  percent  of  the  original   capital
contribution. The limited partners received 99% and the General Partner received
1%  of  these  distributions.   The  primary  source  of  future  liquidity  and
distributions is expected to be derived from cash generated by the Partnership's
properties  after  adequate cash reserves are  established  for future  leasing,
renovations and tenant finish costs. It is anticipated  that the cash flows from
operations  and  cash  reserves  will be  sufficient  to meet  the  needs of the
Partnership.

Pursuant to Section 16.4 of the Partnership's  Amended and Restated Agreement of
Limited Partnership, the Partnership established an Interest Repurchase Reserve.
As of December 7, 1998 (the commencement date of the Partnership's  first tender
offer), 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 Interest  Repurchase  Reserve
was funded from cash reserves. The above offering price per Unit was established
by the General  Partner in its sole discretion and does not purport to represent
the fair market or liquidation  value of the Units.  The funds  remaining in the
Interest  Repurchase  Reserve at the commencement of the December 7, 1998 tender
offer  (discussed  below) were returned to unrestricted  cash for utilization in
the Partnership's operations.

                                       15

<PAGE>

Consolidated Cash Flows and Financial Condition - Continued
-----------------------------------------------------------

On  December  7, 1998,  the  Partnership  and ORIG,  LLC,  an  affiliate  of the
Partnership, (the "bidders") commenced a tender offer (the "First Tender Offer")
to purchase up to 20,000 of the  Partnership's  limited  partnership  Units at a
price of $6.00 per Unit.  The First Tender Offer  provided that the  Partnership
would  purchase the first 10,000 Units tendered and would fund its purchases and
its portion of the  expenses,  associated  with  administering  the First Tender
Offer, from cash reserves. If more than 10,000 Units were tendered,  the bidders
could  choose to acquire  the  additional  Units on the same  terms.  Otherwise,
tendered  Units would be purchased on a pro rata basis up to 20,000.  Units that
were acquired by the Partnership  would be retired.  Units that were acquired by
ORIG, LLC would be held by it. The General  Partner,  NTS-Properties  Associates
VII, did not participate in the First Tender Offer.

Under the terms of the First Tender  Offer,  the First  Tender Offer  expired on
March 6, 1999. As of that date, a total of 25,794 Units were  tendered  pursuant
to the First Tender Offer. The bidders  exercised their right under the terms of
the First Tender  Offer to purchase  more than 20,000 Units and all 25,794 Units
tendered were accepted by the bidders without proration.
The Partnership repurchased 10,000 Units and ORIG, LLC purchased 15,794 Units.

On September 2, 1999, the Partnership and ORIG, LLC, (the "bidders") commenced a
second tender offer (the "Second  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 bidders 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 Units,
and is less  than the book  value per Unit as of the date of the  Second  Tender
Offer.  The Second Tender Offer provides that the Partnership  will purchase the
first 10,000 Units  tendered and will fund its  purchases and its portion of the
expenses,  associated  with  administering  the  Second  Tender  Offer from cash
reserves. If more than 10,000 Units are tendered,  ORIG, LLC will purchase up to
an additional 10,000 Units. If more than 20,000 Units are tendered,  the bidders
may choose to acquire the  additional  Units on the same  terms.  Units that are
acquired by the  Partnership  will be retired.  Units 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 Second Tender Offer.  The Second Tender Offer's
initial  expiration  date was  November 30,  1999.  The Second  Tender Offer was
subsequently extended to December 15, 1999.

The table below  presents  that portion of the  distributions  that  represent a
return of capital on a Generally  Accepted  Accounting  Principle  basis for the
nine months ended September 30, 1999 and 1998.

                                                   Cash
                                 Net Income    Distributions      Return of
                                 Allocated        Declared         Capital
                                 ---------        --------         -------
            Limited Partners:
                   1999          $ 42,648        $  84,861        $  42,213
                   1998               358          115,513          115,155

            General Partner:
                   1999          $    431        $     857        $     426
                   1998                 4            1,167            1,163


                                       16

<PAGE>

Consolidated Cash Flows and Financial Condition - Continued
-----------------------------------------------------------

In an effort to continue to improve occupancy at the  Partnership's  residential
properties,  the  Partnership  has an on-site  leasing  staff,  employees of NTS
Development Company, at each of the apartment communities. The staff handles all
on-site visits from potential  tenants,  coordinates  local advertising with NTS
Development  Company's  marketing  staff,  makes  visits to local  companies  to
promote  fully  furnished  units  and  works  with  current  residents  on lease
renewals.

The  lease at  Blankenbaker  Business  Center  1A  provides  for the  tenant  to
contribute toward the payment of common area expenses, insurance and real estate
taxes.  This lease provision,  along with the fact that  residential  leases are
generally for a period of one year, should protect the Partnership's  operations
from the impact of inflation and changing prices.

During the three months  ended March 31, 1999,  SHPS,  Inc.,  formerly  known as
Sykes Health Plan Services,  Inc.,  announced its intentions to consolidate  its
operations  and  to  build  its  corporate  headquarters  in  Jefferson  County,
Kentucky. One of SHPS, Inc's operations,  Sykes, is already based in Louisville,
Kentucky in Blankenbaker Business Center 1A. Due to the expansion of SHPS, Inc's
headquarters,  it is the  Partnership's  understanding  that SHPS, Inc. does not
intend to  continue  to  occupy  the space at  Blankenbaker  Business  Center 1A
through the duration of its lease,  July 2005. The  Partnership's  proportionate
share of the rental income from this property accounted for approximately 15% of
the  Partnership's  total revenues for the nine months ended September 30, 1999.
The Partnership has not yet determined the effect,  if any, on the Partnership's
operations,  given the fact Sykes is under lease until July 2005 and no official
notice of termination has been received.

Year 2000
---------

All  divisions of NTS  Corporation,  including  NTS-Properties  Associates,  the
General  Partner of the  Partnership,  are  reviewing  the effort  necessary  to
prepare  NTS'  information  systems  (IT) and  non-information  technology  with
embedded technology (ET) for the Year 2000. The information technology solutions
have been addressed  separately for the Year 2000 since the  Partnership saw the
need to move to more advanced  management and accounting  systems made available
by new technology and software developments during the decade of the 1990's.

The PILOT software system, purchased in the early 1990's, is being replaced by a
Windows  based  network  system both for NTS'  headquarters  functions and other
locations.  The real estate accounting system developed,  sold, and supported by
the Yardi Company of Santa Barbara,  California  will replace  PILOT.  The Yardi
system has been tested and is compatible with Year 2000 and beyond.  This system
is being  implemented  with the help of third  party  consultants  and should be
fully  operational by the fourth quarter of 1999.  NTS' system for  multi-family
apartment  locations was  converted to GEAC's Power Site System  earlier in 1998
and is Year 2000 compliant.

The few remaining  systems not addressed by these conversions are being modified
by NTS' in-house staff of programmers. The Hewlett Packard 3000 system, used for
PILOT and custom applications, was purchased in 1997 and will be part of the new
network.  It will be retained as long as necessary to assure  smooth  operations
and has been upgraded to meet Year 2000 requirements.

All risks identified with information technology are believed to be addressed by
these plans.

                                       17

<PAGE>

Year 2000 - Continued
---------------------

The costs of these advances in NTS' systems  technology are not all attributable
to the Year 2000 issue  since NTS had already  identified  the need to move to a
network based system regardless of the Year 2000. The Partnership's share of the
costs involved will be approximately $36,000 during 1999. Costs incurred through
December  31, 1998 were  approximately  $9,000.  These costs  include  primarily
purchase, lease and maintenance of hardware and software.

NTS'  property  management  staff has been  surveying  its  vendors to  evaluate
embedded technology in its alarm systems,  HVAC controls,  telephone systems and
other  computer  associated  facilities.  In a few  cases,  equipment  is  being
replaced. In some cases circuitry is being upgraded.  The cost involved is still
being evaluated. There are no known significant risks that are currently without
solutions.  Management  anticipates that applications  involving ET will be Year
2000 compliant by the fourth quarter of 1999.

NTS is also currently  addressing the Year 2000 readiness of third parties whose
business interruption could have a material negative impact on its business. All
significant  vendors and tenants have  indicated  that they will be compliant by
the end of 1999. Such assurances are being evaluated and documented.

Management has determined that at its current state of readiness,  the need does
not presently  exist for a contingency  plan.  NTS will continue to evaluate the
need for such a plan.

Despite diligent preparation,  unanticipated third-party failures,  inability of
NTS tenants to pay rent when due, more general public infrastructure failures or
failure to successfully  conclude NTS' remediation efforts as planned could have
a material  adverse  impact on NTS results of operations,  financial  conditions
and/or cash flows in 1999 and beyond.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
         ----------------------------------------------------------

Our primary risk  exposure with regards to financial  instruments  is changes in
interest rates. All of the Partnership's debt bears interest at a fixed rate. At
September 30, 1998, a  hypothetical  100 basis point  increase in interest rates
would result in approximately $182,000 increase in the fair value of debt.

                                       18

<PAGE>

PART II.  OTHER INFORMATION

Item 3.           Defaults upon Senior Securities
                  -------------------------------

                  None

Item 5.           Other Information
                  -----------------

                  Mr. Richard L. Good,  who  was  the  Vice  Chairman and former
                  President of  NTS  Capital  Corporation  and  NTS  Development
                  Company, retired effective September 3, 1999.

Item 6.           Exhibits and Reports on Form 8-K
                  --------------------------------

                  (a)      Exhibits:

                  Exhibit 27. Financial Data Schedule

                  (b)      Reports on Form 8-K:

                  None.

Items 1,2 and 4 are not applicable and have been omitted.


                                       19

<PAGE>


                                   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/ Gregory A. Wells
                                                        --------------------
                                                        Gregory A. Wells
                                                        Senior Vice President of
                                                        NTS Capital Corporation




Date: November 12, 1999


                                       20


<PAGE>