# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
WASHINGTON, D.C. 20549

# FORM 10-Q

# [X] QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For
the quarterly period ended March 31, 2005

OR

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

Commission File Number
001-32389

NTS REALTY HOLDINGS LIMITED PARTNERSHIP(Exact name of registrant as specified in its charter)

|Delaware                        | 41-2111139                          
|------------------------------- | ------------------------------------
|(State or other jurisdiction of | (I.R.S. Employer Identification No.)
|incorporation or organization)  |                                     

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

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

N/A(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.      Yes [X]    No [   ]

Indicate by check mark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).     Yes [   ]    No [X]

As of May 9, 2005, there were 11,381,608 limited partnership units outstanding.

---

# TABLE OF CONTENTS

| |  |  |  |      
| |  |  |  | -----
| |  |  |  | Pages

# PART I 
FINANCIAL INFORMATION

|        |  |                                                                                            |  |      
|------- |  | ------------------------------------------------------------------------------------------ |  | -----
|Item 1. |  | Financial Statements                                                                      
|       
|        |  | Balance Sheets as of March 31, 2005 and December 31, 2004                                  |  | 4    
|       
|        |  | Statement of Partners' Equity as of March 31, 2005                                         |  | 4    
|       
|        |  | Statements of Operations for the Three Moonths Ended March 31, 2005 and 2004               |  | 5-6  
|       
|        |  | Statements of Cash Flows for the Three Months Ended March 31, 2005 and 2004                |  | 7-8  
|       
|        |  | Notes to Financial Statements                                                              |  | 9-30 
|       
|Item 2. |  | Management's Discussion and Analysis of Financial Condition and
     Results of Operations |  | 31-38
|       
|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                 |  | 39   
|       
|Item 4. |  | Controls and Procedures                                                                    |  | 39   
|       

# PART II  OTHER INFORMATION

| |  |             |  |      
| |  | ----------- |  | -----
|
| |  | Items 1 - 6 |  | 40-42
|
| |  | Signatures  |  | 43   

2

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# INFORMATION REGARDING
FORWARD-LOOKING STATEMENTS

Some
of the statements included in this quarterly report on Form 10-Q, particularly those
included in Part I, Item 2  Managements Discussion and Analysis of Financial
Condition and Results of Operations (MD&A), may be considered
forward-looking statements because the statements relate to matters which have
not yet occurred. For example, phrases such as we anticipate,
believe or expect indicate that it is possible that the event
anticipated, believed or expected may not occur. If these events do not occur, the result
which we expected also may, or may not, occur in a different manner, which may be more or
less favorable to us. We do not undertake any obligation to update these forward-looking
statements.

Any
forward-looking statements included in MD&A, or elsewhere in this report, reflect our
managing general partners best judgment based on known factors, but 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 described in our filings with the Securities and Exchange Commission,
particularly our registration statement on Form S-4, which became effective on October 27,
2004. Any forward-looking information provided by us pursuant to the safe harbor
established by the Private Securities Litigation Reform Act of 1995 should be evaluated in
the context of these factors.

3

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# PART I  FINANCIAL INFORMATION
Item 1  Financial Statements

# NTS REALTY HOLDINGS LIMITED PARTNERSHIP
BALANCE SHEETS
AS OF MARCH 31, 2005 AND DECEMBER 31, 2004

`(UNAUDITED)
                                                                  ---------------------
                                                                     March 31, 2005         December 31, 2004
                                                                  ---------------------    --------------------
ASSETS
    Cash and equivalents                                        $        15,439,632      $          2,573,855
    Cash and equivalents - restricted                                     2,874,832                   313,255
    Accounts receivable, net of allowance for doubtful
      accounts of $226,576 at March 31, 2005 and
      $125,485 at December 31, 2004                                       1,940,516                 1,609,802
    Land, buildings and amenities, net                                  156,123,646               156,243,048
    Other assets                                                          6,312,001                 5,807,464
                                                                  ---------------------    --------------------

    TOTAL ASSETS                                                $       182,690,627      $        166,547,424
                                                                  =====================    ====================

LIABILITIES AND PARTNERS' EQUITY
    Mortgages and notes payable                                 $       127,532,509      $        112,799,938
    Accounts payable and accrued expenses                                 3,151,096                 2,588,663
    Accounts payable and accrued expenses - affiliate                       502,182                   177,879
    Security deposits                                                       857,427                   676,665
    Other liabilities                                                     1,605,702                   774,294
                                                                  ---------------------    --------------------

    TOTAL LIABILITIES                                                   133,648,916               117,017,439

COMMITMENTS AND CONTINGENCIES (NOTE 11)

PARTNERS' EQUITY                                                         49,041,711                49,529,985
                                                                  ---------------------    --------------------

TOTAL LIABILITIES AND PARTNERS' EQUITY                          $       182,690,627      $        166,547,424
                                                                  =====================    ====================`

# NTS REALTY HOLDINGS LIMITED PARTNERSHIP
STATEMENT OF PARTNERS EQUITY
AS OF MARCH 31, 2005
(UNAUDITED)

`General        Limited
                                      Partner        Partners        General          Limited
                                     Interests      Interests        Partner         Partners          Total
                                   -------------------------------------------------------------------------------
PARTNERS' EQUITY
Initial equity                            714,491   10,667,117  $     3,132,821  $    46,770,445 $   49,903,266
Net loss prior year                             -            -          (23,433)        (349,848)      (373,281)
Net loss current year                           -            -          (30,652)        (457,622)      (488,274)
                                   -------------------------------------------------------------------------------

Balances on March 31, 2005                714,491   10,667,117  $     3,078,736  $    45,962,975 $   49,041,711
                                   ===============================================================================`

The accompanying notes to financial
statements are an integral part of these statements.

4

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# NTS REALTY HOLDINGS LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2005
(UNAUDITED)

`REVENUES
     Rental income                                                        $                8,044,775
     Tenant reimbursements                                                                   539,120
                                                                            ---------------------------

     TOTAL REVENUES                                                                        8,583,895
                                                                            ---------------------------

EXPENSES
     Operating expenses                                                                    2,094,729
     Operating expenses - affiliated                                                         980,391
     Management fees                                                                         389,475
     Real estate taxes                                                                       561,838
     Professional and administrative expenses                                                738,633
     Professional and administrative expenses - affiliated                                   352,286
     Depreciation and amortization                                                         2,142,464
                                                                            ---------------------------

     TOTAL OPERATING EXPENSES                                                              7,259,816
                                                                            ---------------------------

     OPERATING INCOME                                                                      1,324,079

     Interest and other income                                                                44,224
     Interest expense                                                                     (1,827,262)
     Loss on disposal of assets                                                              (29,315)
                                                                            ---------------------------

     Net loss                                                             $                 (488,274)
                                                                            ===========================

     Net loss allocated to limited partners                               $                 (457,622)
                                                                            ===========================

     Net loss per limited partnership unit                                $                    (0.04)
                                                                            ===========================

     Number of limited partnership units                                                  10,667,117
                                                                            ===========================`

The accompanying notes to financial
statements are an integral part of these statements.

5

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# NTS REALTY HOLDINGS
LIMITED PARTNERSHIP
PREDECESSORS STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2004
(UNAUDITED)

`NTS         NTS         NTS         NTS         NTS        NTS
                                      Properties   Properties  Properties  Properties Properties   Private
                                          III          IV          V           VI         VII       Group      BBC 1A
                                     ------------------------------------------------------------------------------------
REVENUES
   Rental income                    $     845,297      551,512    947,755    2,614,272   385,305    2,167,446   188,197
   Tenant reimbursements                   88,770       45,696    267,529          387         -      138,410    49,056
                                     ------------------------------------------------------------------------------------

   TOTAL REVENUES                         934,067      597,208  1,215,284    2,614,659   385,305    2,305,856   237,253
                                     ------------------------------------------------------------------------------------

EXPENSES
   Operating expenses                     191,169      123,718    382,607      767,966   104,682      456,859    29,023
   Operating expenses - affiliated         87,460      127,371    165,627      413,136    72,941      199,055    11,342
   Management fees                         42,922       34,333     67,171      132,721    19,450      134,748    14,236
   Real estate taxes                       52,146       31,354    131,823      125,788    19,908      103,231    13,248
   Professional and administrative
     expenses                             126,610      203,114    278,154      339,749   116,106       34,843         -
   Professional and administrative
     expenses - affiliated                 36,042       37,507     48,030       98,920    33,713            -         -
   Depreciation and amortization          279,088      126,181    323,631      662,767   102,473      522,366    55,423
                                     ------------------------------------------------------------------------------------

   TOTAL OPERATING EXPENSES               815,437      683,578  1,397,043    2,541,047   469,273    1,451,102   123,272
                                     ------------------------------------------------------------------------------------

   OPERATING INCOME (LOSS)                118,630      (86,370)  (181,759)      73,612   (83,968)     854,754   113,981

   Interest and other income                2,919        1,882      6,082        2,326       819        3,537        69
   Interest expense                      (101,439)     (58,061)  (245,123)    (599,880)  (60,940)    (675,178)  (25,515)
   Loss on disposal of assets                (448)           -          -         (103)        -      (38,598)        -
   Income from investment in
     joint ventures                             -       24,491          -            -    27,747            -         -
                                     ------------------------------------------------------------------------------------

   Income (loss) before minority
     interest                              19,662     (118,058)  (420,800)    (524,045) (116,342)     144,515    88,535
   Minority interest (loss) income              -            -    (10,364)       5,416         -            -         -
                                     ------------------------------------------------------------------------------------

   Net income (loss)                $      19,662     (118,058)  (410,436)    (529,461) (116,342)     144,515    88,535
                                     ====================================================================================

   Net income (loss) allocated to
     the limited partners           $      31,184     (116,877)  (406,332)    (524,166) (115,179)
                                     =============================================================

   Net income (loss) per limited
     partnership unit               $        2.48        (4.85)    (13.31)       13.48     (0.21)
                                     =============================================================

   Weighted average number of
     limited partnership units             12,570       24,109     30,521       38,889   552,236
                                     =============================================================`

The accompanying notes to financial
statements are an integral part of these statements.

6

---

# NTS REALTY HOLDINGS LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2005
(UNAUDITED)

`CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                                            $                (488,274)
Adjustments to reconcile net loss to net cash used in operating activities:
    Loss on disposal of assets                                                                         29,315
    Depreciation and amortization                                                                   2,320,404
    Write-off of loan costs                                                                           113,102
    Changes in assets and liabilities:
      Cash and equivalents - restricted                                                              (561,577)
      Accounts receivable                                                                            (330,714)
      Other assets                                                                                 (1,139,684)
      Accounts payable and accrued expenses                                                           562,433
      Accounts payable and accrued expenses - affiliate                                               324,303
      Security deposits                                                                               180,762
      Other liabilities                                                                               831,408
                                                                                     ----------------------------

    Net cash provided by operating activities                                                       1,841,478
                                                                                     ----------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Additions to land, buildings and amenities                                                     (1,644,698)
    Cash and equivalents - restricted                                                              (2,000,000)
                                                                                     ----------------------------

    Net cash used in investing activities                                                          (3,644,698)
                                                                                     ----------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from mortgages and notes payable                                                      30,000,000
    Principal payments on mortgages and notes payable                                                (281,367)
    Payoff of notes payable                                                                           (14,712)
    Payoff of revolving note payable                                                              (14,971,350)
    Additions to loan costs                                                                           (63,574)
                                                                                     ----------------------------

    Net cash provided by financing activities                                                      14,668,997
                                                                                     ----------------------------

    Net increase in cash and equivalents                                                           12,865,777
                                                                                     ----------------------------

CASH AND EQUIVALENTS, beginning of period                                                           2,573,855
                                                                                     ----------------------------

CASH AND EQUIVALENTS, end of period                                                 $              15,439,632
                                                                                     ============================`

The accompanying notes to financial
statements are an integral part of these statements.

7

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# NTS REALTY HOLDINGS LIMITED PARTNERSHIP
PREDECESSORS STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2004
(UNAUDITED)

`NTS         NTS          NTS         NTS         NTS          NTS
                                               Properties  Properties  Properties   Properties  Properties    Private
                                                  III          IV           V           VI         VII         Group      BBC 1A
                                              -------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                            $    19,662    (118,058)     (410,436)   (529,461)    (116,342)    144,515     88,535
Adjustments to reconcile net income (loss) to
 net cash provided by (used in) operating
 activities:
  Loss on disposal of assets                         448           -             -         103            -      38,598          -
  Depreciation and amortization                  306,694     135,504       379,944     676,244      103,253     589,156     65,286
  Income from investment in joint ventures             -     (24,491)            -           -      (27,747)          -          -
  Minority interest (loss) income                      -           -       (10,364)      5,416            -           -          -
  Changes in assets and liabilities:
    Cash and equivalents - restricted            (18,483)    (23,395)     (292,475)    (28,044)        (425)    (93,881)   (12,360)
    Accounts receivable                          (72,231)     19,474        21,789      83,752        1,571       4,399     19,430
    Other assets                                 (37,472)       (777)      (17,195)    (12,128)         529     (19,998)      (364)
    Accounts payable and accrued expenses        (59,546)    (28,697)      136,790     689,931      (48,112)   (192,861)     2,252
    Security deposits                              2,685          50         6,200         991          150           -          -
    Other liabilities                             70,877      23,951       159,106     125,238       20,982     101,757     14,819
                                              -------------------------------------------------------------------------------------

  Net cash provided by (used in) operating
  activities                                     212,634     (16,439)      (26,641)   1,012,042     (66,141)    571,685     177,598
                                               -------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Additions to land, buildings and amenities     (60,567)     (3,023)      (46,377)    (233,015)          -     (28,867)         -
  Investment in and advances from (to) joint                                                         10,924
    ventures                                           -      30,028             -      (14,480)                      -          -
  Minority interest                                    -           -        (5,415)           -           -           -          -
                                              -------------------------------------------------------------------------------------

  Net cash (used in) provided by investing
  activities                                     (60,567)     27,005       (51,792)    (247,495)     10,924     (28,867)         -
                                              -------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from mortgages and notes payable            -           -       194,440            -           -           -          -
  Principal payments on mortgages and notes
    payable                                     (108,485)   (158,198)      (72,976)    (539,843)    (39,410)   (795,851)  (144,083)
  Cash distributions                                   -           -             -            -           -    (134,000)   (34,856)
  Cash contributions                                   -           -             -            -           -     222,000          -
  Additions to loan costs                         (1,000)          -        (3,116)           -           -           -          -
                                              -------------------------------------------------------------------------------------

  Net cash (used in) provided by financing
  activities                                    (109,485)   (158,198)      118,348     (539,843)    (39,410)   (707,851)  (178,939)
                                              -------------------------------------------------------------------------------------

  Net increase (decrease) in cash and
  equivalents                                     42,582    (147,632)       39,915      224,704     (94,627)   (165,033)    (1,341)

CASH AND EQUIVALENTS, beginning of period        180,911     298,240       191,321      125,342     263,655     440,049     33,977
                                              -------------------------------------------------------------------------------------

CASH AND EQUIVALENTS, end of period          $   223,493     150,608       231,236      350,046     169,028     275,016     32,636
                                              =====================================================================================`

The accompanying notes to financial
statements are an integral part of these statements.

8

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# NTS REALTY HOLDINGS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

The
unaudited financial statements included herein should be read in conjunction with NTS
Realty Holdings Limited Partnerships (NTS Realty) 2004 annual report on
Form 10-K as filed with the Securities and Exchange Commission on March 31, 2005. In the
opinion of our managing general partner, all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation have been made to the accompanying
financial statements for the three months ended March 31, 2005 and 2004. The results of
operations for the interim periods are not necessarily indicative of the results that may
be expected for the full year or any other interim period. As used in this quarterly
report on Form 10-Q the terms we, us or our, as the
context requires, may refer to NTS Realty or its interests in its properties.

# Note 1  Summary of
Significant Accounting Policies

A) Organization and
Distribution Policy

NTS
Realty was organized in the state of Delaware in 2003. Our registration statement on Form
S-4 was made effective by the Securities and Exchange Commission (SEC) on
October 27, 2004 with respect to a proposed merger of NTS-Properties III; NTS-Properties
IV; NTS-Properties V, a Maryland limited partnership; NTS-Properties VI, a Maryland
limited partnership; and NTS-Properties VII, Ltd. (the Partnerships)
registered under the Securities Exchange Act of 1934, along with other real estate
entities affiliated with their general partners, specifically Blankenbaker Business Center
1A and the NTS Private Groups assets and liabilities. Certain litigation as
described in Note  11 Commitments and Contingencies was settled in connection with
the merger. The merger was completed on December 28, 2004 after a majority of the
outstanding limited partnership interests of each Partnership were voted in favor of the
merger. As a result of the merger, the Partnerships and Blankenbaker Business Center 1A
ceased to exist by operation of law. Concurrent with the merger, ORIG, LLC, a Kentucky
limited liability company (ORIG), affiliated with the Partnerships
general partners, contributed substantially all of its assets and liabilities to NTS
Realty, including the NTS Private Group properties. We accounted for the merger using the
purchase method. All purchase price allocations are final.

The
Partnerships, NTS Private Group and Blankenbaker Business Center 1A are referred to as NTS
Realtys Predecessors (the Predecessors). NTS Realty did not have
significant operations until the merger on December 28, 2004. All operations prior to that
are for the Predecessors and are reflected as such in the accompanying Statements of
Operations. The Predecessors operating results were substantially complete as of
December 27, 2004 for the calendar year ended December 31, 2004.

In
connection with the merger, we issued 11,381,608 limited partnership units to the former
limited and general partners of the Partnerships and to ORIG.

We
recently refinanced approximately $94.0 million of debt on the properties contributed by
the Partnerships and ORIG with approximately $104.0 million of new debt. Acquisition of
the new debt required us to pay yield maintenance premiums on the refinanced debt, which
totaled approximately $5.8 million.

9

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We
are in the business of developing, constructing, owning and operating multifamily
properties, commercial and retail real estate and land leases. Following the merger and
contribution and as of March 31, 2005, we own thirty-two properties, comprised of: nine
multifamily properties; nineteen office and business centers; three retail properties; and
one ground lease. The properties are located in and around Louisville (22) and Lexington
(3), Kentucky; Orlando (2) and Fort Lauderdale (3), Florida; Indianapolis (1), Indiana and
Atlanta (1), Georgia. Our office and business centers aggregate approximately 1.7 million
square feet. We own multifamily properties containing approximately 1,350 units and retail
properties containing approximately 210,000 square feet of space, as well as one ground
lease associated with a 120-space parking lot attached to one of our properties.

The
consolidated financial statements of NTS-Properties V and NTS-Properties VI include the
accounts of all wholly-owned properties and majority-owned joint ventures. Intercompany
transactions and balances have been eliminated.

We
pay distributions if and when authorized by our managing general partner. We are required
to pay distributions on a quarterly basis, commencing in the first quarter of 2005, equal
to sixty-five percent (65%) of our net cash flow from operations as this term
is defined in regulations promulgated by the Treasury Department under the Internal
Revenue Code of 1986, as amended; provided that if a law is enacted or existing law is
modified or interpreted in a manner that subjects us to taxation as a corporation or
otherwise subjects us to entity level taxation for federal, state or local income tax
purposes, we will adjust the amount distributed to reflect our obligation to pay tax. Any
distribution other than a distribution with respect to the final quarter of a calendar
year shall be made no later than forty-five (45) days after the last day of such quarter
based on our estimate of net cash flow from operations for the year. Any
distribution with respect to the final quarter of a calendar year shall be made no later
than ninety (90) days after the last day of such quarter based on actual net cash
flow from operations for the year, adjusted for any excess or insufficient
distributions made with respect to the first three quarters of the calendar year.

Net
cash flow from operations may be reduced by the amount of reserves as determined by
us each quarter. NTS Realty Capital will establish these reserves for, among other things,
working capital or capital improvement needs. Therefore, there is no assurance that we
will have net cash flow from operations from which to pay distributions in the future. For
example, our partnership agreement permits our managing general partner to reinvest sales
or refinancing proceeds in new and existing properties or to create reserves to fund
future capital expenditures. Because net cash flow from operations is calculated after
reinvesting sales or refinancing proceeds or establishing reserves, we may not have any
net cash flow from operations from which to pay distributions.

# Note 3  Use of
Estimates in the Preparation of Financial Statements

The
preparation of financial statements in accordance with U.S. generally accepted accounting
principles requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

10

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# Note 4 
Concentration of Credit Risk

We
own and operate multifamily, commercial and retail properties and a land lease in
Louisville and Lexington, Kentucky, Fort Lauderdale and Orlando, Florida, Indianapolis,
Indiana and Atlanta, Georgia.

Our
financial instruments that are exposed to concentrations of credit risk consist of cash
and equivalents. We maintain our cash accounts primarily with banks located in Kentucky.
The total cash balances are insured by the FDIC up to $100,000 per bank account. We may at
times, in certain accounts, have deposits in excess of $100,000.

# Note 5  Cash and
Equivalents

Cash
and equivalents include cash on hand and short-term, highly liquid investments with
initial maturities of three months or less. We have a cash management program which
provides for the overnight investment of excess cash balances. Under an agreement with a
bank, excess cash is invested in a mutual fund for U.S. government and agency securities
each night. As of March 31, 2005, approximately $2,441,000 of our overnight investment was
included in cash and equivalents.

# Note 6  Cash and
Equivalents  Restricted

Cash
and equivalents  restricted represents cash on hand and short-term, highly liquid
investments with initial maturities of three months or less which have been escrowed with
certain mortgage companies and banks for property taxes, insurance and tenant improvements
in accordance with certain loan and lease agreements and certain security deposits.

# Note 7  Property
and Depreciation

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

11

---

Depreciation
expense for the three months ended March 31, 2005 and 2004 was as follows:

`(UNAUDITED)
                                                                -------------------------------------------
                                                                            Three Months Ended
                                                                                March 31,
                                                                -------------------------------------------
                                                                        2005                  2004
                                                                ---------------------  --------------------

NTS Realty                                                    $        1,734,785
                                                                =====================

NTS-Properties III                                                                   $          273,715
NTS-Properties IV                                                                               126,181
NTS-Properties V                                                                                323,631
NTS-Properties VI                                                                               662,767
NTS-Properties VII                                                                              102,472
NTS Private Group                                                                               498,741
Blankenbaker Business Center 1A                                                                  55,423
                                                                                       --------------------

                                                                                     $        2,042,930
                                                                                       ====================`

Statement
of Financial Accounting Standards No. 144 Accounting for the Impairment or Disposal
of Long-Lived Assets, specifies circumstances in which certain long-lived assets
must be reviewed for impairment. If the carrying amount of an asset exceeds the sum of its
expected future cash flows, the assets carrying value must be written down to fair
value. In determining the value of an investment property and whether the investment
property is impaired, management considers several factors such as projected rental and
vacancy rates, property operating expenses, capital expenditures and interest rates. The
capitalization rate used to determine property valuation is based on the market in which
the investment property is located, length of leases, tenant financial strength, the
economy in general, demographics, environment, property location, visibility, age and
physical condition among others. All of these factors are considered by management in
determining the value of any particular investment property. The value of any particular
investment property is sensitive to the actual results of any of these factors, either
individually or taken as a whole. If the actual results differ from managements
judgment, the valuation could be negatively or positively affected. Application of this
standard during the three months ended March 31, 2005 and 2004 did not result in an
impairment loss.

12

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# Note 8  Mortgages
and Notes Payable

Mortgages and notes payable consist
of the following:

`(UNAUDITED)
                                                                                 --------------------
                                                                                      March 31,            December 31,
                                                                                        2005                   2004
                                                                                 --------------------  ---------------------
Note payable to a bank with interest payable in monthly installments, at a
variable rate based on LIBOR one-month rate plus 1.75%, due June 28, 2005.
The note was refinanced in March 2005, as discussed below.                     $                 -   $        14,971,350

Mortgage payable to an insurance company in monthly installments, bearing
interest at 5.07%, maturing on March 15, 2015, secured by certain land and
buildings, with a carrying value of $25,775,613.                                        30,000,000                     -

Mortgage payable to a bank in monthly installments, bearing interest at a
variable rate based on LIBOR one-month rate plus 2.50%, currently 5.36%, due
January 1, 2008, secured by certain land and buildings, with a carrying value
of $17,179,258.  The mortgage is guaranteed by Mr. Nichols (75%) and Mr.
Lavin (25%).                                                                            13,956,000            14,000,000

Mortgage payable to an insurance company in monthly installments, bearing
interest at 5.98%, maturing January 15, 2015, secured by certain land and
buildings, with a carrying value of $73,944,001.                                        74,849,728            75,000,000

Mortgage payable to a bank in monthly installments, bearing interest at
9.00%, maturing August 1, 2010, secured by certain land and a building, with
a carrying value of $3,001,274.                                                          2,785,451             2,806,142

Mortgage payable to an insurance company in monthly installments, bearing
interest at 8.45%, maturing November 1, 2015, secured by certain land and a
building, with a carrying value of $2,648,158.                                           3,057,595             3,101,366

Mortgage payable to an insurance company in monthly installments, bearing
interest at 8.375%, maturing December 1, 2010, secured by certain land,
buildings and amenities, with a carrying value of $2,769,632.                            2,883,735             2,905,604

Note payable to a finance company in monthly installments, bearing interest
at 8.50%, due July 15, 2006, secured by equipment.  The note was paid in full
in January 2005.                                                                                 -                15,476
                                                                                 --------------------  ---------------------

                                                                               $       127,532,509   $       112,799,938
                                                                                 ====================  =====================`

Based
on the borrowing rates currently available to us for loans with similar terms and average
maturities, the fair value of long-term debt on March 31, 2005 was approximately
$119,626,000.

The
note payable to a bank was paid from the proceeds of a $30 million mortgage payable to an
insurance company in March 2005. The mortgage payable bears interest at a fixed rate of
5.07%, maturing on March 15, 2015 and is secured by certain land and buildings, with a
carrying value of $25,775,613.

Our
mortgages may be prepaid but are generally subject to a yield-maintenance premium.

13

---

# Note 9  Accounts
Payable and Accrued Expenses  Affiliate

Accounts
payable and accrued expenses  affiliate includes amounts owed to NTS Development
Company for reimbursement of salary and overhead expenses.

# Note 10  Related
Party Transactions

NTS
Realty is externally managed under an agreement with NTS Development Company (NTS
Devco), an affiliate of NTS Realtys general partners. NTS Devco is paid a
management fee pursuant to the terms of an agreement entered into with NTS Realty. NTS
Devco is also reimbursed its actual costs for services rendered to NTS Realty.

We
were charged the following amounts pursuant to an agreement with NTS Devco for the three
months ended March 31, 2005. 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.

# NTS Realty

`(UNAUDITED)
                                                                                  ------------------------------
                                                                                       Three Months Ended
                                                                                         March 31, 2005
                                                                                  ------------------------------

Property management fees                                                         $                 389,475
                                                                                  ------------------------------

Property management                                                                                611,852
Leasing                                                                                             50,790
Administrative - operating                                                                         296,783
Other                                                                                               20,966
                                                                                  ------------------------------

     Total operating expenses - affiliated                                                         980,391
                                                                                  ------------------------------

Professional and administrative expenses - affiliated                                              352,286
                                                                                  ------------------------------

Related party transactions capitalized                                                                   -
                                                                                  ------------------------------

Total related party transactions                                                 $               1,722,152
                                                                                  ==============================`

During
the three months ended March 31, 2005, we were charged $15,161 for property maintenance
fees from an affiliate of NTS Devco.

NTS
Devco leased 20,368 square feet in one of our properties, NTS Center, at a rental rate of
$14.50 per square foot. We received rental payments of approximately $74,000, or 8% of our
total rental income, from NTS Devco during the three months ended March 31, 2005.

NTS
Devco leased 1,604 square feet in Commonwealth Business Center Phase I, at a rental rate
of $5.50 per square foot. We received rental payments of approximately $2,000 from NTS
Devco during the three months ended March 31, 2005.

14

---

# NTS-Properties III

Prior
to the merger and pursuant to an agreement with NTS-Properties III (NTS-III),
NTS Devco, an affiliate NTS-IIIs general partner, received property management fees
on a monthly basis. The fees were paid in an amount equal to 5% of the gross receipts from
our properties. Also pursuant to an agreement, NTS Devco received a repair and maintenance
fee equal to 5.9% of costs incurred which related to capital improvements. These repair
and maintenance fees were capitalized as part of land, buildings and amenities.

NTS-III
was charged the following amounts pursuant to an agreement with NTS Devco for the three
months ended March 31, 2004. These charges included items which were expensed as operating
expenses  affiliated or professional and administrative expenses  affiliated
and items which were capitalized as other assets or as land, buildings and amenities.

`(UNAUDITED)
                                                                                  ------------------------------
                                                                                       Three Months Ended
                                                                                         March 31, 2004
                                                                                  ------------------------------

Property management fees                                                         $                  42,922
                                                                                  ------------------------------

Property management                                                                                 54,487
Leasing                                                                                             15,291
Administrative - operating                                                                          15,653
Other                                                                                                2,029
                                                                                  ------------------------------

     Total operating expenses - affiliated                                                          87,460
                                                                                  ------------------------------

Professional and administrative expenses - affiliated                                               36,042
                                                                                  ------------------------------

Repairs and maintenance fees                                                                         1,890
Leasing commissions                                                                                  3,303
                                                                                  ------------------------------

     Total related party transactions capitalized                                                    5,193
                                                                                  ------------------------------

Total related party transactions                                                 $                 171,617
                                                                                  ==============================`

During
the three months ended March 31, 2004, NTS-III was charged $1,828 for property maintenance
fees from an affiliate of NTS Devco.

During
the three months ended March 31, 2004, NTS Devco leased 20,368 square feet in NTS Center
at a rental rate of $14.50 per square foot. NTS-III received rental payments of
approximately $74,000, or 8% of their total rental income, from NTS Devco during the three
months ended March 31, 2004.

15

---

# NTS-Properties IV

Prior
to the merger and pursuant to an agreement with NTS-Properties IV (NTS-IV),
NTS Devco, an affiliate of NTS-IVs general partner, received property management
fees on a monthly basis. The fees were paid in an amount equal to 5% of the gross receipts
from the multifamily property and 6% of the gross receipts from the commercial properties.
Also pursuant to an agreement, NTS Devco received a repair and maintenance fee equal to
5.9% of costs incurred which related to capital improvements. These repair and maintenance
fees were capitalized as part of land, buildings and amenities.

NTS-IV
was charged the following amounts pursuant to an agreement with NTS Devco for the three
months ended March 31, 2004. These charges included items which were expensed as operating
expenses  affiliated or professional and administrative expenses  affiliated
and items which were capitalized as other assets or as land, buildings and amenities.

`(UNAUDITED)
                                                                                 ------------------------------
                                                                                      Three Months Ended
                                                                                        March 31, 2004
                                                                                 ------------------------------

Property management fees                                                        $                  34,333
                                                                                 ------------------------------

Property management                                                                                76,752
Leasing                                                                                            20,787
Administrative - operating                                                                         27,906
Other                                                                                               1,926
                                                                                 ------------------------------

     Total operating expenses - affiliated                                                        127,371
                                                                                 ------------------------------

Professional and administrative expenses - affiliated                                              37,507
                                                                                 ------------------------------

Repairs and maintenance fees                                                                            -
Leasing commissions                                                                                 5,788
                                                                                 ------------------------------

     Total related party transactions capitalized                                                   5,788
                                                                                 ------------------------------

Total related party transactions                                                $                 204,999
                                                                                 ==============================`

During
the three months ended March 31, 2004, NTS Devco leased 1,604 square feet in Commonwealth
Business Center Phase I at a rental rate of $5.50 per square foot. NTS-IV received rental
payments of approximately $2,000 from NTS Devco during the three months ended March 31,
2004.

16

---

# NTS-Properties V

Prior
to the merger and pursuant to an agreement with NTS-Properties V (NTS-V), NTS
Devco, an affiliate of NTS-Vs general partner, received property management fees on
a monthly basis. The fees were paid in an amount equal to 5% of the gross receipts from
the multifamily property and 6% of the gross receipts from the commercial properties. Also
pursuant to an agreement, NTS Devco received a repair and maintenance fee equal to 5.9% of
costs incurred which related to capital improvements. These repair and maintenance fees
were capitalized as part of land, buildings and amenities.

NTS-V
was charged the following amounts pursuant to an agreement with NTS Devco for the three
months ended March 31, 2004. These charges included items which were expensed as operating
expenses  affiliated or professional and administrative expenses  affiliated
and items which were capitalized as other assets or as land, buildings and amenities.

`(UNAUDITED)
                                                                                   ------------------------------
                                                                                        Three Months Ended
                                                                                          March 31, 2004
                                                                                   ------------------------------

Property management fees                                                          $                  67,171
                                                                                   ------------------------------

Property management                                                                                 118,629
Leasing                                                                                              11,192
Administrative - operating                                                                           34,368
Other                                                                                                 1,438
                                                                                   ------------------------------

     Total operating expenses - affiliated                                                          165,627
                                                                                   ------------------------------

Professional and administrative expenses - affiliated                                                48,030
                                                                                   ------------------------------

Repairs and maintenance fees                                                                          1,702
Leasing commissions                                                                                       -
                                                                                   ------------------------------

     Total related party transactions capitalized                                                     1,702
                                                                                   ------------------------------

Total related party transactions                                                  $                 282,530
                                                                                   ==============================`

17

---

# NTS-Properties VI

Prior
to the merger and pursuant to an agreement with NTS-Properties VI (NTS-VI),
NTS Devco, an affiliate of NTS-VIs general partner, received property management
fees on a monthly basis. The fees were equal to 5% and 6% of the gross revenues from the
multifamily properties and the commercial property, respectively. Also pursuant to an
agreement, NTS Devco received a repair and maintenance fee equal to 5.9% of costs incurred
which related to capital improvements and major repair and renovation projects. These
repair and maintenance fees were capitalized as part of land, buildings and amenities.

NTS-VI
was charged the following amounts pursuant to an agreement with NTS Devco for the three
months ended March 31, 2004. These charges included items which were expensed as operating
expenses  affiliated or professional and administrative expenses  affiliated
and items which were capitalized as other assets or as land, buildings and amenities.

`(UNAUDITED)
                                                                                  ------------------------------
                                                                                       Three Months Ended
                                                                                         March 31, 2004
                                                                                  ------------------------------

Property management fees                                                         $                 132,721
                                                                                  ------------------------------

Property management                                                                                261,601
Leasing                                                                                             36,060
Administrative - operating                                                                         110,267
Other                                                                                                5,208
                                                                                  ------------------------------

     Total operating expenses - affiliated                                                         413,136
                                                                                  ------------------------------

Professional and administrative expenses - affiliated                                               98,920
                                                                                  ------------------------------

Repairs and maintenance fees                                                                        12,197
Leasing commissions                                                                                  4,538
                                                                                  ------------------------------

     Total related party transactions capitalized                                                   16,735
                                                                                  ------------------------------

Total related party transactions                                                 $                 661,512
                                                                                  ==============================`

During
the three months ended March 31, 2004, NTS-V was charged $7,006 for property maintenance
fees from an affiliate of NTS Devco.

18

---

# NTS-Properties VII

Prior
to the merger and pursuant to an agreement with NTS-Properties VII (NTS-VII),
NTS Devco, an affiliate of NTS-VIIs general partner, received property management
fees on a monthly basis. The fees were equal to 5% of the gross revenues from our
multifamily properties. Also pursuant to an agreement, NTS Devco received a repair and
maintenance fee equal to 5.9% of costs incurred which related to capital improvements and
major repair and renovation projects. These repair and maintenance fees were capitalized
as part of land, buildings and amenities.

NTS-VII
was charged the following amounts pursuant to an agreement with NTS Devco for the three
months ended March 31, 2004. These charges included items which were expensed as operating
expenses  affiliated or professional and administrative expenses  affiliated
and items which were capitalized as other assets or as land, buildings and amenities.

`(UNAUDITED)
                                                                                  ------------------------------
                                                                                       Three Months Ended
                                                                                         March 31, 2004
                                                                                  ------------------------------

Property management fees                                                         $                  19,450
                                                                                  ------------------------------

Property management                                                                                 40,979
Leasing                                                                                              6,758
Administrative - operating                                                                          24,646
Other                                                                                                  558
                                                                                  ------------------------------

     Total operating expenses - affiliated                                                          72,941
                                                                                  ------------------------------

Professional and administrative expenses - affiliated                                               33,713
                                                                                  ------------------------------

Related party transactions capitalized                                                                   -
                                                                                  ------------------------------

Total related party transactions                                                 $                 126,104
                                                                                  ==============================`

19

---

# NTS Private Group

Prior
to the merger, NTS Devco, an affiliate of NTS Private Group (the Group),
received property management fees on a monthly basis. The fees were equal to 6% of the
gross revenues from commercial and retail properties and $100 monthly for each commercial
land lease. Also pursuant to an agreement, NTS Devco received a repair and maintenance fee
equal to 5% of costs incurred which related to capital improvements and major repair and
renovation projects. These repair and maintenance fees were capitalized as part of land,
buildings and amenities.

The
Group was charged the following amounts by NTS Devco for the three months ended March 31,
2004. These charges included items which were expensed as operating expenses 
affiliated and items which were capitalized as other assets or as land, buildings and
amenities.

`(UNAUDITED)
                                                                                  ------------------------------
                                                                                       Three Months Ended
                                                                                         March 31, 2004
                                                                                  ------------------------------

Property management fees                                                         $                 134,748
                                                                                  ------------------------------

Property management                                                                                122,265
Leasing                                                                                             31,658
Administrative - operating                                                                          41,298
Other                                                                                                3,834
                                                                                  ------------------------------

     Total operating expenses - affiliated                                                         199,055
                                                                                  ------------------------------

Professional and administrative expenses - affiliated                                                    -
                                                                                  ------------------------------

Repairs and maintenance fees                                                                         1,941
Leasing commissions                                                                                    909
                                                                                  ------------------------------

     Total related party transactions capitalized                                                    2,850
                                                                                  ------------------------------

Total related party transactions                                                 $                 336,653
                                                                                  ==============================`

During
the three months ended March 31, 2004 the Group was charged $8,452 for property
maintenance fees from an affiliate of NTS Devco.

20

---

# Blankenbaker Business
Center 1A

Prior
to the merger and pursuant to an agreement with the partnerships which formed the
Blankenbaker Business Center Joint Venture, NTS Devco, an affiliate of the general
partners of the partnerships, received property management fees on a monthly basis. The
fee was equal to 6% of the gross revenues from the partnerships commercial
properties. Also permitted by an agreement, NTS Devco received a repair and maintenance
fee equal to 5.9% of costs incurred which related to capital improvements. These repair
and maintenance fees were capitalized as part of land, buildings and amenities.

The
Blankenbaker Business Center Joint Venture was charged the following amounts pursuant to
an agreement with NTS Devco for the three months ended March 31, 2004. These charges
included items which were expensed as operating expenses  affiliated and items which
were capitalized as other assets or as land, buildings and amenities.

`(UNAUDITED)
                                                                                  ------------------------------
                                                                                       Three Months Ended
                                                                                         March 31, 2004
                                                                                  ------------------------------

Property management fees                                                         $                  14,236
                                                                                  ------------------------------

Property management                                                                                  8,120
Leasing                                                                                                  -
Administrative - operating                                                                           3,066
Other                                                                                                  156
                                                                                  ------------------------------

     Total operating expenses - affiliated                                                          11,342
                                                                                  ------------------------------

Professional and administrative expenses - affiliated                                                    -
                                                                                  ------------------------------

Related party transactions capitalized                                                                   -
                                                                                  ------------------------------

Total related party transactions                                                 $                  25,578
                                                                                  ==============================`

During
the three months ended March 31, 2004, we were charged an immaterial fee for property
maintenance fees from an affiliate of NTS Devco.

# Note 11 
Commitments and Contingencies

We,
as an owner of real estate, are subject to various environmental laws of federal, state
and local governments. Our compliance with existing laws has not had a material adverse
effect on our financial condition and results of operations. However, we cannot predict
the impact of new or changed laws or regulations on our current properties or on
properties that we may acquire in the future.

We
do not believe there is any litigation threatened against us other than routine litigation
arising out of the ordinary course of business, some of which is expected to be covered by
insurance, none of which is expected to have a material effect on our combined financial
position or results of operations.

21

---

Litigation

On
May 6, 2004, the Superior Court of the State of California for the County of Contra Costa
granted its final approval of the settlement agreement jointly filed by the general
partners (the General Partners) of the Partnerships, along with certain of
their affiliates, with the class of plaintiffs in the action originally captioned
Buchanan, et al. v. NTS-Properties Associates, et al. (Case No. C 01-05090) on December 5,
2003.  At the final hearing, any member of the class of plaintiffs was given the
opportunity to object to the final approval of the settlement agreement, the entry of a
final judgment dismissing with prejudice the Buchanan litigation, or an application of an
award for attorneys fees and expenses to plaintiffs counsel.  The
Superior Courts order provided, among other things, that: (1) the settlement
agreement, and all transactions contemplated thereby, including the merger of the
Partnerships into us, are fair, reasonable and adequate, and in the best interests of the
class of plaintiffs; (2) the plaintiffs complaint and each and every cause of action
and claim set forth therein is dismissed with prejudice; (3) each class member is barred
from transferring, selling or otherwise disposing of (other than by operation of law)
their interests until the earlier of the closing date of the merger, the termination of
the settlement or June 30, 2004; and (4) each class member who requested to be excluded
from the settlement released their claims in the Bohm litigation.

On
June 11, 2004, Joseph Bohm and David Duval, class members who objected to the settlement
agreement but whose objections were overruled by the Superior Court (the
Appellants), filed an appeal in the Court of Appeals of the State of
California, First Appellate District. The Appellants filed their opening appellate brief
on October 22, 2004. The General Partners and the Partnerships, as well as the class
representatives, filed their respective responses on February 14, 2005, and Appellants
filed their reply. The appellate court is in the process of scheduling oral arguments on
this matter.

On
February 27, 2003, two individuals filed a class and derivative action in the Circuit
Court of Jefferson County, Kentucky captioned Bohm, et al. v. J.D. Nichols, et al. (Case
No. 03-CI-01740) against certain of the General Partners and several individuals and
entities affiliated with us. The complaint was amended to include the general partner of
NTS-Properties III and the general partner of NTS-Properties Plus Ltd., which is no longer
in existence. In the amended complaint, the plaintiffs purport to bring claims on behalf
of a class of limited partners and derivatively on behalf of us and the Partnerships based
on alleged overpayment of fees, prohibited investments, improper failures to make
distributions, purchases of limited partnerships interests at insufficient prices and
other violations of the limited partnership agreements. The plaintiffs are seeking, among
other things, compensatory and punitive damages in an unspecified amount, an accounting,
the appointment of a receiver or liquidating trustee, the entry of an order of dissolution
against the Partnerships, a declaratory judgment and injunctive relief. No amounts have
been accrued for the settlement of this action in our financial statements. The General
Partners and their legal counsel believe that this action is without merit and are
vigorously defending it.

On
March 2, 2004, the General Partners filed a motion to dismiss the Bohm litigation. After
the motion to dismiss was fully briefed, the settlement agreement in the Buchanan
litigation received final court approval. The Circuit Court of Jefferson County, Kentucky,
instructed the plaintiffs in the Bohm litigation to file an amended complaint in light of
the approved settlement of the Buchanan litigation. The plaintiffs in the Bohm litigation
filed a corrected second amended complaint on August 11, 2004. The General Partners, along
with all defendants, filed a motion to strike the corrected second amended complaint. On
February 9, 2005, the Circuit Court instructed the defendants to file a responsive
pleading only as to direct claims asserted by the individual plaintiffs. On March 9, 2005,
the General Partners, along with all of the defendants, filed: (1) a motion to dismiss and
(2) a joint motion to dismiss

22

---

the corrected second
amended complaint. A hearing on these motions is scheduled for July 15, 2005. The General
Partners believe that the claims asserted in the corrected second amended
complaint have no merit.

# Note 12  Segment
Reporting

Our
reportable operating segments include  Multifamily, Commercial, Retail and Land Real
Estate Operations. The following unaudited financial information of the operating segments
has been prepared using a management approach, which is consistent with the basis and
manner in which our management internally disaggregates financial information for the
purpose of assisting in making internal operating decisions. We evaluate performance based
on stand-alone operating segment net income or loss. Expenses at the Partnership level are
represented in the non-segment column.

# NTS Realty

`Three Months Ended March 31, 2005
                                  ---------------------------------------------------------------------------------------
                                   Multifamily     Commercial       Retail         Land       Non Segment     Total
                                  --------------------------------------------- -----------------------------------------
Rental income                    $    3,582,597  $    4,200,896  $    341,392  $      9,042$      (89,152) $   8,044,775
Tenant reimbursements                         -         525,907        13,213             -             -        539,120
                                  --------------------------------------------- -----------------------------------------

     Total revenues                   3,582,597       4,726,803       354,605         9,042       (89,152)     8,583,895

Operating expenses and operating
  expenses - affiliated               1,610,597       1,433,427        30,961           135             -      3,075,120
Management fees                         177,905         198,119        13,451             -             -        389,475
Real estate taxes                       242,130         311,727         7,578           403             -        561,838
Professional and administrative
  expenses and professional and
  administrative expenses
  - affiliated                                -               -             -             -     1,090,919      1,090,919
Depreciation and amortization           834,219       1,232,765        74,828           652             -      2,142,464
                                  --------------------------------------------- -----------------------------------------

     Total operating expenses         2,864,851       3,176,038       126,818         1,190     1,090,919      7,259,816

Operating income (loss)                 717,746       1,550,765       227,787         7,852    (1,180,071)     1,324,079

Interest and other income                 1,987          17,657            12             -        24,568         44,224
Interest expense                       (584,332)       (849,857)      (91,251)            -      (301,822)    (1,827,262)
Loss on disposal of assets              (21,881)         (7,434)            -             -             -        (29,315)
                                  --------------------------------------------- -----------------------------------------

Net income (loss)                $       113,520 $      711,131  $    136,548  $      7,852$   (1,457,325) $    (488,274)
                                  ============================================= =========================================`

# NTS-Properties III

NTS-IIIs
reportable operating segments included only one segment  Commercial Real Estate
Operations.

23

---

# NTS-Properties IV

NTS-IVs
reportable operating segments included  Multifamily and Commercial Real Estate
Operations. The multifamily operations represented NTS-IVs ownership and operating
results relative to a multifamily community known as The Willows of Plainview Phase I. The
commercial operations represented NTS-IVs ownership and operating results relative
to suburban commercial office space known as Commonwealth Business Center Phase I and
Plainview Point Office Center Phases I and II.

The
following unaudited financial information of the operating segments was prepared using a
management approach, which was consistent with the basis and manner in which NTS-IVs
management internally reported financial information for the purposes of assisting in
making internal operating decisions. NTS-IVs management evaluated performance based
on stand-alone operating segment net income or loss. Professional and administrative
expenses, depreciation and amortization, interest and other income, interest expense and
joint venture income or loss incurred at the Partnership level were not allocated to the
operating segments.

`Three Months Ended March 31, 2004
                                                         -------------------------------------------------------------
                                                           Multifamily           Commercial             Total
                                                         -------------------  -------------------  -------------------
Rental income                                          $           286,589  $           264,923  $          551,512
Tenant reimbursements                                                    -               45,696              45,696
                                                         -------------------  -------------------  -------------------

     Total revenues                                                286,589              310,619             597,208
                                                         -------------------  -------------------  -------------------

Operating expenses and operating expenses - affiliated             137,979              113,110             251,089
Management fees                                                     14,716               19,617              34,333
Real estate taxes                                                   13,260               18,094              31,354
Depreciation and amortization                                       50,864               73,788             124,652
                                                         -------------------  -------------------  -------------------

     Total operating expenses                                      216,819              224,609             441,428
                                                         -------------------  -------------------  -------------------

Operating income                                                    69,770               86,010             155,780

Interest and other income                                               69                1,502               1,571
Interest expense                                                   (50,437)              (7,624)            (58,061)
                                                         -------------------  -------------------  -------------------

Net income                                             $            19,402  $            79,888  $           99,290
                                                         ===================  ===================  ===================`

24

---

A
reconciliation of the totals reported for the operating segments to the applicable line
items in the financial statements is necessary given amounts recorded at the Partnership
level and not allocated to the operating properties for internal reporting purposes:

`Three Months Ended
                                                                                            March 31,
                                                                                 --------------------------------
                                                                                              2004
                                                                                 --------------------------------
DEPRECIATION AND AMORTIZATION
Depreciation and amortization for reportable segments                         $                    124,652
Depreciation and amortization for Partnership                                                        1,529
                                                                                 --------------------------------

     Total depreciation and amortization                                      $                    126,181
                                                                                 ================================

INTEREST AND OTHER INCOME
Interest and other income for reportable segments                             $                      1,571
Interest and other income for Partnership                                                              311
                                                                                 --------------------------------

     Total interest and other income                                          $                      1,882
                                                                                 ================================

NET INCOME (LOSS)
Net income for reportable segments                                            $                     99,290
Net loss for Partnership (1)                                                                      (217,348)
                                                                                 --------------------------------

     Total net loss                                                           $                   (118,058)
                                                                                 ================================`

|(1) | The Partnership net loss was primarily composed of professional and
          administrative costs born by the Partnership and also includes any joint venture
          income or loss recorded at the Partnership level and not allocated to the
          operating segments. The professional and administrative costs include the tax
          and public company reporting and compliance costs associated with a public
          limited partnership.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

25

---

# NTS-Properties V

NTS-Vs
reportable operating segments included  Multifamily and Commercial Real Estate
Operations. The multifamily operations represented NTS-Vs ownership and operating
results relative to a multifamily community known as The Willows of Plainview Phase II.
The commercial operations represented NTS-Vs ownership and operating results
relative to suburban commercial office space known as Commonwealth Business Center Phase
II and Lakeshore Business Center Phases I, II and III.

The
following unaudited financial information of the operating segments was prepared using a
management approach, which was consistent with the basis and manner in which NTS-Vs
management internally reported financial information for the purposes of assisting in
making internal operating decisions. NTS-Vs management evaluated performance based
on stand-alone operating segment net income or loss. Professional and administrative
expenses, depreciation and amortization, interest and other income, interest expense and
minority interest income or loss recorded at the Partnership level were not allocated to
the operating segments.

`Three Months Ended March 31, 2004
                                                         -------------------------------------------------------------------
                                                             Multifamily             Commercial               Total
                                                         ---------------------  ---------------------  ---------------------
Rental income                                          $             293,138  $             654,617  $             947,755
Tenant reimbursements                                                      -                267,529                267,529
                                                         ---------------------  ---------------------  ---------------------

     Total revenues                                                  293,138                922,146              1,215,284
                                                         ---------------------  ---------------------  ---------------------

Operating expenses and operating expenses - affiliated               169,157                379,077                548,234
Management fees                                                       14,762                 52,409                 67,171
Real estate taxes                                                     14,490                117,333                131,823
Depreciation and amortization                                         56,584                262,392                318,976
                                                         ---------------------  ---------------------  ---------------------

     Total operating expenses                                        254,993                811,211              1,066,204
                                                         ---------------------  ---------------------  ---------------------

Operating income                                                      38,145                110,935                149,080

Interest and other income                                                509                  5,297                  5,806
Interest expense                                                     (66,297)              (173,735)              (240,032)
                                                         ---------------------  ---------------------  ---------------------

Net loss                                               $             (27,643) $             (57,503) $             (85,146)
                                                         =====================  =====================  =====================`

26

---

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:

`Three Months Ended
                                                                                               March 31,
                                                                                     ------------------------------
                                                                                                 2004
                                                                                     ------------------------------
DEPRECIATION AND AMORTIZATION
Depreciation and amortization for reportable segments                             $                   318,976
Depreciation and amortization for Partnership                                                           4,655
                                                                                     ------------------------------

     Total depreciation and amortization                                          $                   323,631
                                                                                     ==============================

INTEREST AND OTHER INCOME
Interest and other income for reportable segments                                 $                     5,806
Interest and other income for Partnership                                                                 276
                                                                                     ------------------------------

     Total interest and other income                                              $                     6,082
                                                                                     ==============================

INTEREST EXPENSE
Interest expense for reportable segments                                          $                   240,032
Interest expense for Partnership                                                                        5,091
                                                                                     ------------------------------

     Total interest expense                                                       $                   245,123
                                                                                     ==============================

NET LOSS
Net loss for reportable segments                                                  $                   (85,146)
Net loss for Partnership (1)                                                                         (335,654)
Minority interest loss                                                                                (10,364)
                                                                                     ------------------------------

     Total net loss                                                               $                  (410,436)
                                                                                     ==============================`

|(1) | The Partnership net loss was primarily composed of professional and
          administrative costs born by the Partnership as well as interest and other
          income, depreciation, interest expense and minority interest recorded at the
          Partnership level and not allocated to the operating segments. The professional
          and administrative costs include the tax and public company reporting and
          compliance costs associated with a public limited partnership.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

27

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# NTS-Properties VI

NTS-VIs
reportable operating segments included  Multifamily and Commercial Real Estate
Operations. The multifamily operations represented NTS-VIs ownership and operating
results relative to the multifamily communities known as Willow Lake Apartments, Park
Place Apartments Phases I and III, Sabal Park Apartments and Golf Brook Apartments. The
commercial operations represented NTS-VIs ownership and operating results relative
to suburban commercial office space known as Plainview Point Office Center Phase III.

The
following unaudited financial information of the operating segments was prepared using a
management approach, which was consistent with the basis and manner in which NTS-VIs
management internally disaggregated financial information for the purposes of assisting in
making internal operating decisions. NTS-VIs management evaluated performance based
on stand-alone operating segment net income or loss. Professional and administrative
expenses, depreciation and amortization, interest and other income, interest expense and
minority interest income or loss recorded at the Partnership level were not allocated to
the operating segments.

`Three Months Ended March 31, 2004
                                                         -------------------------------------------------------------
                                                             Multifamily           Commercial             Total
                                                         ---------------------  ------------------  ------------------
Rental income                                          $           2,476,683  $          137,589  $        2,614,272
Tenant reimbursements                                                      -                 387                 387
                                                         ---------------------  ------------------  ------------------

     Total revenues                                                2,476,683             137,976           2,614,659
                                                         ---------------------  ------------------  ------------------

Operating expenses and operating expenses - affiliated             1,103,418              77,684           1,181,102
Management fees                                                      124,345               8,376             132,721
Real estate taxes                                                    104,135              21,653             125,788
Depreciation and amortization                                        586,378              54,022             640,400
                                                         ---------------------  ------------------  ------------------

     Total operating expenses                                      1,918,276             161,735           2,080,011
                                                         ---------------------  ------------------  ------------------

Operating income (loss)                                              558,407             (23,759)            534,648

Interest and other income                                                457                 150                 607
Interest expense                                                    (206,146)                  -            (206,146)
Loss on disposal of assets                                              (103)                  -                (103)
                                                         ---------------------  ------------------  ------------------

Net income (loss)                                      $             352,615  $          (23,609) $          329,006
                                                         =====================  ==================  ==================`

28

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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:

`Three Months Ended
                                                                                               March 31,
                                                                                    ---------------------------------
                                                                                                  2004
                                                                                    ---------------------------------
DEPRECIATION AND AMORTIZATION
Depreciation and amortization for reportable segments                            $                     640,400
Depreciation and amortization for Partnership                                                           22,367
                                                                                    ---------------------------------

     Total depreciation and amortization                                         $                     662,767
                                                                                    =================================

INTEREST AND OTHER INCOME
Interest and other income for reportable segments                                $                         607
Interest and other income for Partnership                                                                1,719
                                                                                    ---------------------------------

     Total interest and other income                                             $                       2,326
                                                                                    =================================

INTEREST EXPENSE
Interest expense for reportable segments                                         $                    (206,146)
Interest expense for Partnership                                                                      (393,734)
                                                                                    ---------------------------------

     Total interest expense                                                      $                    (599,880)
                                                                                    =================================

NET INCOME (LOSS)
Net income for reportable segments                                               $                     329,006
Net loss for Partnership (1)                                                                          (853,051)
Minority interest income                                                                                 5,416
                                                                                    ---------------------------------

     Total net loss                                                              $                    (529,461)
                                                                                    =================================`

|(1) | The Partnerships net loss was primarily composed of professional and
          administrative costs born by the Partnership and also includes interest expense,
          depreciation and minority interest recorded at the Partnership level and not
          allocated to the operating segments. The professional and administrative costs
          include the tax and public company reporting and compliance costs associated
          with a public limited partnership.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# NTS-Properties VII

NTS-VIIs
reportable operating segments included only one segment  Multifamily Operations.

29

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# NTS Private Group

The
Groups reportable operating segments included  Land, Retail and Commercial
Real Estate Operations. The retail operations represented the Groups ownership and
operating results relative to Springs Station, Bed, Bath & Beyond and Outlets Mall
properties located in Louisville, Kentucky. The commercial operations represented the
Groups ownership and operating results relative to suburban commercial office space
located in Louisville, Kentucky. The land operations represented the Groups
ownership and operating results relative to a ground lease located in Louisville,
Kentucky.

The
following unaudited financial information of the operating segments was prepared using a
management approach, which was consistent with the basis and manner in which the
Groups management internally disaggregated financial information to assist in making
internal operating decisions. The Groups management evaluated performance based on
stand-alone operating segment net income or loss.

`Three Months Ended March 31, 2004
                                            ----------------------------------------------------------------------
                                                Land               Retail           Commercial         Total
                                            ----------------  -----------------  ---------------- ----------------
 Rental income                             $       13,384    $      323,436     $     1,830,626  $    2,167,446
 Tenant reimbursements                                  -            16,323             122,087         138,410
                                            ----------------  -----------------  ---------------- ----------------

      Total revenues                               13,384           339,759           1,952,713       2,305,856

 Operating expenses and operating
   expenses - affiliated                              754           146,246             508,914         655,914
 Management fees                                      300            18,762             115,686         134,748
 Real estate taxes                                    398             7,479              95,354         103,231
 Professional and administrative expenses           7,466             7,466              19,911          34,843
 Depreciation and amortization                      1,272            75,050             446,044         522,366
                                            ----------------  -----------------  ---------------- ----------------

      Total operating expenses                     10,190           255,003           1,185,909       1,451,102

 Operating income                                   3,194            84,756             766,804         854,754

 Interest and other income                              -                30               3,507           3,537
 Interest expense                                       -          (105,524)           (569,654)       (675,178)
 Loss on disposal of assets                             -                 -             (38,598)        (38,598)
                                            ----------------  -----------------  ---------------- ----------------

 Net income (loss)                         $        3,194    $      (20,738)    $       162,059  $      144,515
                                            ================  =================  ================ ================`

# Blankenbaker Business
Center 1A

The
Joint Ventures reportable operating segments included only one segment 
Commercial Real Estate Operations.

30

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# Item 2 
Managements Discussion and Analysis of Financial Condition and Results of Operations

For
the Managements Discussion and Analysis of Financial Condition and Results of
Operations (MD&A), financial information for the three months ended March
31, 2004 was treated as if the Partnerships, ORIG and the NTS Private Group were combined
on a historical basis.

The
following discussion should be read in conjunction with the financial statements and
historical financial statements appearing in Item 1 and the cautionary statements below.
This discussion treats our statements of operations and cash flow information for the
three months ended March 31, 2004 as if it were combined with our predecessors.

# Critical Accounting
Policies

General

A
critical accounting policy is one that would materially affect our operations or financial
condition, and requires management to make estimates or judgments in certain
circumstances. These judgments often result from the need to make estimates about the
effect of matters that are inherently uncertain. Critical accounting policies discussed in
this section are not to be confused with accounting principles and methods disclosed in
accordance with U.S. generally accepted accounting principles (GAAP). GAAP
requires information in financial statements about accounting principles, methods used and
disclosures pertaining to significant estimates. The following disclosure discusses
judgments known to management pertaining to trends, events or uncertainties known which
were taken into consideration upon the application of those policies and the likelihood
that materially different amounts would be reported upon taking into consideration
different conditions and assumptions.

Distribution Policy

We
pay distributions if and when authorized by our managing general partner. We are required
to pay distributions on a quarterly basis, commencing in the first quarter of 2005, equal
to sixty-five percent (65%) of our net cash flow from operations as this term
is defined in regulations promulgated by the Treasury Department under the Internal
Revenue Code of 1986, as amended; provided that if a law is enacted or existing law is
modified or interpreted in a manner that subjects us to taxation as a corporation or
otherwise subjects us to entity level taxation for federal, state or local income tax
purposes, we will adjust the amount distributed to reflect our obligation to pay tax. Any
distribution other than a distribution with respect to the final quarter of a calendar
year shall be made no later than forty-five (45) days after the last day of such quarter
based on our estimate of net cash flow from operations for the year. Any
distribution with respect to the final quarter of a calendar year shall be made no later
than ninety (90) days after the last day of such quarter based on actual net cash
flow from operations for the year, adjusted for any excess or insufficient
distributions made with respect to the first three quarters of the calendar year.

Net
cash flow from operations may be reduced by the amount of reserves as determined by
us each quarter. NTS Realty Capital will establish these reserves for, among other things,
working capital or capital improvement needs. Therefore, there is no assurance that we
will have net cash flow from operations from which to pay distributions in the future. For
example, our partnership agreement permits our managing general partner to reinvest sales
or refinancing proceeds in new and existing properties or to create reserves to fund
future capital expenditures. Because net cash flow from

31

---

operations is calculated after
reinvesting sales or refinancing proceeds or establishing reserves, we may not have any
net cash flow from operations from which to pay distributions.

Impairment and Valuation

Statement
of Financial Accounting Standards (SFAS) No. 144 Accounting for the
Impairment or Disposal of Long Lived Assets, specifies circumstances in which
certain long lived assets must be reviewed for impairment. If this 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. In determining the value
of an investment property and whether the investment property is impaired, management
considers several factors such as projected rental and vacancy rates, property operating
expenses, capital expenditures and interest rates. The capitalization rate used to
determine property valuation is based on among others, the market in which the investment
property is located, length of leases, tenant financial strength, the economy in general,
demographics, environment, property location, visibility, age and physical condition. All
of these factors are considered by management in determining the value of any particular
investment property. The value of any particular investment property is sensitive to the
actual results of any of these factors, either individually or taken as a whole. If the
actual results differ from managements judgment, the valuation could be negatively
or positively affected.

The
merger was accounted for using the purchase method of accounting in accordance with SFAS
No. 141 Business Combinations. NTS Realty was treated as the purchasing
entity. The portion of each partnerships assets and liabilities acquired from
unaffiliated third parties was adjusted to reflect its fair market value. That portion
owned by affiliates of the general partners of the Partnerships was reflected at
historical cost. The assets and liabilities contributed by NTS Private Group were adjusted
to reflect their fair market value, except for that portion owned by Mr. Nichols, which
was reflected at historical cost due to his common control over the contributing entities.

In
accordance with SFAS No. 141, we have allocated the purchase price of each acquired
investment property among land, buildings and improvements, other intangibles, including
acquired above market leases, acquired below market leases and acquired in place lease
origination cost which is the market cost avoidance of executing the acquired leases.
Allocation of the purchase price is an area that requires complex judgments and
significant estimates. We used the information contained in a third party appraisal as the
primary basis for allocating the purchase price between land and buildings. A pro rata
portion of the purchase price was allocated to the value of avoiding a lease-up period for
acquired in-place leases. The value of in-place leases is amortized to expense over the
remaining current term of the respective leases. A portion of the purchase price was
allocated to the estimated lease origination cost based on estimated lease execution costs
for similar leases and considered various factors including geographic location and size
of leased space. We then evaluated acquired leases based upon current market rates at the
acquisition date and various other factors including geographic location, size and the
location of leased space within the property, tenant profile and the credit risk of the
tenant in determining whether the acquired lease is above or below market. After acquired
leases were determined to be at, above or below market, we allocated a pro rata portion of
the purchase price to any acquired above or below market lease based upon the present
value of the difference between the contractual lease rate and the estimated market rate.
We also consider an allocation of purchase price to in-place leases that have a customer
relationship intangible value. The characteristics we consider in allocating these values
include the nature and extent of existing business relationships with the tenant, growth
prospects for developing new business with the tenant and the tenants credit quality
and

32

---

expectations of lease renewals. We
currently do not have any tenants with whom we have developed a relationship that we
believe has any current intangible value.

Recognition of Rental
Income

Under
GAAP, we are required to recognize rental income based on the effective monthly rent for
each lease. The effective monthly rent is equal to the average monthly rent during the
term of the lease, not the stated rent for any particular month. The process, known as
straight lining or stepping rent generally has the effect of
increasing rental revenues during the early phases of a lease and decreasing rental
revenues in the latter phases of a lease. Due to the impact of straight
lining, on a historical combining basis, rental income exceeded the cash collected
for rent by approximately $333,000, for the three months ended March 31, 2005. If rental
income calculated on a straight line basis exceeds the cash rent due under the lease, the
difference is recorded as an increase in deferred rent receivable and included as a
component of accounts receivable on the relevant balance sheet. If the cash rent due under
the lease exceeds rental income calculated on a straight line basis, the difference is
recorded as a decrease in deferred rent receivable and is recorded as a decrease of
accounts receivable on the relevant balance sheet. We defer recognition of contingent
rental income, such as percentage or excess rent, until the specified target that triggers
the contingent rental income is achieved. We periodically review the collectability of
outstanding receivables. Allowances are generally taken for tenants with outstanding
balances due for a period greater than ninety days and tenants with outstanding balances
due for a period less than ninety days but that we believe are potentially uncollectible.

Recognition of Lease
Termination Income

We
recognize lease termination income upon receipt of the income. We accrue lease termination
income if there is a signed termination agreement, all of the conditions of the agreement
have been met and the tenant is no longer occupying the property.

Cost Capitalization and
Depreciation Policies

We
review all expenditures and capitalize any item exceeding $1,000 deemed to be an upgrade
or a tenant improvement with an expected useful life greater than one year. Land,
buildings and amenities are stated at cost. Depreciation expense is computed using the
straight line method over the estimated useful lives of the assets. Buildings and
improvements have estimated useful lives between 5-30 years, land improvements have
estimated useful lives between 5-30 years, and amenities have estimated useful lives
between 5-30 years. Acquired above and below market leases are amortized on a straight
line basis over the life of the related leases as an adjustment to rental income. Acquired
in place lease origination cost is amortized over the life of the lease as a component of
amortization expense.

# Results of Operations

This
section describes our results of operations for the three months ended March 31, 2004 as
if it were combined with our Predecessors operations without adjustment. As of March
31, 2005, we owned nineteen office and business centers, nine multifamily properties,
three retail properties and one ground lease. We generate substantially all of our
operating income from property operations.

33

---

Net
loss for the three months ended March 31, 2005 and 2004 was approximately $(488,000) and
$(922,000), respectively. The decreased net loss is primarily due to decreased legal and
professional expenses related to the merger and class action litigation. Rental income
remained relatively stable between the three months ended March 31, 2005 and 2004. The
following tables include certain selected summarized operating data for the three months
ended March 31, 2005 and 2004. This data should be read in conjunction with our financial
statements, including the notes attached hereto.

`Three Months Ended March 31, 2005
                               ---------------------------------------------------------------------------------------
                                  Land         Retail      Commercial     Multifamily     Non Segment      Total
                               ------------ ------------ --------------- --------------- --------------- -------------
Total revenues                 $    9,042   $   354,605  $    4,726,803  $    3,582,597  $      (89,152) $  8,583,895
Operating expenses and
  operating expenses-affiliated       135        30,961       1,433,427       1,610,597               -     3,075,120
Depreciation and amortization         652        74,828       1,232,765         834,219               -     2,142,464
Total interest expense                  -        91,251         849,857         584,332         301,822     1,827,262
Net income (loss)                   7,852       136,548         711,131         113,520      (1,457,325)     (488,274)`

`Three Months Ended March 31, 2004
                               ---------------------------------------------------------------------------------------
                                  Land         Retail      Commercial     Multifamily     Non Segment      Total
                               ------------ ------------ --------------- --------------- --------------- -------------
Total revenues                 $   13,384   $   339,759  $    4,494,774  $    3,441,715  $            -  $  8,289,632
Operating expenses and
  operating expenses-affiliated       754       146,246       1,397,779       1,588,177               -     3,132,956
Depreciation and amortization       1,272        75,050       1,169,710         789,446          36,451     2,071,929
Total interest expense                  -       105,524         877,967         383,040         399,605     1,766,136
Net income (loss)                   3,194       (20,738)        432,267         357,309      (1,693,617)     (921,585)`

We
believe the changes in rental income and tenant reimbursements from period to period are
temporary effects of each propertys specific mix of lease maturities and are not
indicative of any known trend, except for Commonwealth Business Center Phase I where we
expect there will be a protracted period for the property to become fully leased again.

Occupancy
levels at our properties by segment as of March 31, 2005 and 2004 were as follows:

`As of
                                                                      March 31,
                                                      ------------------------------------------
                                                             2005                   2004
                                                      --------------------    ------------------
Commercial                                                   83.4%                  82.4%
Multifamily                                                  88.2%                  87.0%
Retail                                                       99.5%                 100.0%
Land                                                          N/A                    N/A`

We
believe the changes in occupancy on March 31 from year to year are temporary effects of
each propertys specific mix of lease maturities and are not indicative of any known
trend, except for Commonwealth Business Center Phase I where we expect there will be a
protracted period for the property to become full leased again.

34

---

The
average occupancy levels at our properties by segment for the three months ended March 31,
2005 and 2004 were as follows:

`Three Months Ended
                                                                       March 31,
                                                       ------------------------------------------
                                                              2005                   2004
                                                       --------------------    ------------------
Commercial                                                    83.3%                  82.7%
Multifamily                                                   87.8%                  87.0%
Retail                                                        99.5%                 100.0%
Land                                                           N/A                    N/A`

We
believe the changes in average occupancy from period to period are temporary effects of
each propertys specific mix of lease maturities and are not indicative of any known
trend, except for Commonwealth Business Center Phase I where we expect there will be a
protracted period for the property to become fully leased again.

The
leasing and renewal negotiations for our commercial properties located in Louisville,
Kentucky are handled by leasing agents that are employees of NTS Development Company. All
advertising for the commercial properties is coordinated by NTS Development Companys
marketing staff located in Louisville, Kentucky.

In
an effort to continue to improve occupancy at our multifamily properties, we have on-site
leasing staff, who are employees of NTS Development Company, at each of the multifamily
properties. The staff handles all on-site visits from potential tenants, coordinates local
advertising with NTS Development Companys marketing staff, makes visits to local
companies to promote fully furnished apartments, and negotiates lease renewals with
current residents.

The
following discussion relating to changes in our results of operations includes only
material line items within our Statements of Operations or line items for which there was
a material change between the three months ended March 31, 2005 and 2004.

Rental Income and Tenant
Reimbursements

Rental
income and tenant reimbursements for the three months ended March 31, 2005 and 2004 were
approximately $8,584,000 and $8,290,000, respectively. The increase of approximately
$294,000, or 4%, was primarily the result of increased revenues in the commercial and
multifamily segments. The commercial segment increase was the result of increased average
occupancy at Plainview Point Office Center Phase III, Atrium Center and Lakeshore Business
Center Phase III partially offset by decreased average occupancy at Commonwealth Business
Center Phase I, Blankenbaker Business Center Phase II and Lakeshore Business Center Phase
I. The multifamily segment increase was the result of increased average occupancy and
average rent per unit at Golf Brook Apartments, Park Place Apartments Phase I and II, and
Sabal Park Apartments partially offset by decreased average occupancy and average rent per
unit at The Willows of Plainview Phase I and II, The Park at the Willows, Park Place
Apartments Phase III and Willow Lake Apartments.

35

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Operating Expenses and
Operating Expenses  Affiliated

Operating
expenses for the three months ended March 31, 2005 and 2004 were approximately $2,095,000
and $2,056,000, respectively. The increase of approximately $39,000, or 2%, was not a
significant change, however there were significant offsetting variances within our
commercial and retail segments. The offsetting variances were due to an increase in bad
debt expense at Lakeshore Business Center Phases I and II and Peachtree Corporate Center
for our commercial segment. The increase was partially offset by a decrease in bad debt
expense at Outlets Mall for our retail segment.

Operating
expenses  affiliated for the three months ended March 31, 2005 and 2004 were
approximately $980,000 and $1,077,000, respectively. The decrease of approximately
$97,000, or 9%, was primarily the result of decreased personnel costs at all of our
properties.

Operating
expenses  affiliated are for the services performed by employees of NTS Development
Company, an affiliate of our general partners. These employee services include property
management, leasing, maintenance, security and other services necessary to manage and
operate our business.

Management Fees

Management
fees for the three months ended March 31, 2005 and 2004 were approximately $389,000 and
$446,000, respectively. The decrease of approximately $57,000, or 13%, was primarily the
result of a change in the management fee calculation pursuant to the terms of an agreement
with NTS Development Company.

Real Estate Taxes

Real
estate taxes for the three months ended March 31, 2005 and 2004 were approximately
$562,000 and $477,000, respectively. The increase of approximately $85,000, or 18%, was
primarily the result of adjustments made to the periodic expense in 2004 upon notice of
the reduction of the tax assessments at Willow Lake Apartments. The increase was partially
offset by a decreased tax assessment at Golf Brook Apartments.

Professional and
Administrative Expenses and Professional and Administrative Expenses  Affiliated

Professional
and administrative expenses for the three months ended March 31, 2005 and 2004 were
approximately $739,000 and $1,099,000, respectively. The decrease of approximately
$360,000, or 33%, was primarily the result of reduced legal and professional fees related
to the merger and to the class action litigation. Professional and administrative expenses
for the three months ended March 31, 2005 included approximately $153,000 and $153,000 of
merger and litigation expenses, respectively. Professional and administrative expenses for
the three months ended March 31, 2004 included approximately $681,000 and $212,000 of
merger and litigation expenses, respectively.

Professional
and administrative expenses  affiliated for the three months ended March 31, 2005
and 2004 were approximately $352,000 and $254,000, respectively. The increase of
approximately $98,000, or 39%, was the result of increased personnel costs at all of our
properties.

36

---

Professional
and administrative expenses  affiliated are for the services performed by employees
of NTS Development Company, an affiliate of our general partners. These employee services
include legal, financial and other services necessary to manage and operate our business.

Professional
and administrative expenses  affiliated consisted of the following:

`Three Months Ended
                                                                         March 31,
                                                    -----------------------------------------------------
                                                              2005                       2004
                                                    -------------------------  --------------------------

Finance                                            $              101,000     $               71,000
Accounting                                                        157,000                    108,000
Investor Relations                                                 47,000                     31,000
Human Resources                                                     3,000                     18,000
Overhead                                                           44,000                     26,000
                                                    -------------------------  --------------------------

Total                                              $              352,000     $              254,000
                                                    =========================  ==========================`

Depreciation and
Amortization

Depreciation
and amortization expenses for the three months ended March 31, 2005 and 2004 were
approximately $2,142,000 and $2,072,000, respectively. The increase of approximately
$70,000, or 3%, was not a significant change, however, there were significant offsetting
variances. The offsetting variances were primarily the result of amortization of our
intangible assets, partially offset by the revision of our fixed assets lives subsequent
to their acquisition by NTS Realty Holdings Limited Partnership.

Interest Expense

Interest
expense for the three months ended March 31, 2005 and 2004 was approximately $1,827,000
and $1,766,000, respectively. The increase of approximately $61,000, or 3%, was not a
significant change and was not indicative of any known trend or uncertainty. There were no
material offsetting changes.

# Liquidity and Capital
Resources

Our
most liquid asset is our cash and cash equivalents, which consist of cash and short term
investments, but do not include any restricted cash. Operating income generated by the
properties will be the primary source from which we generate cash. Other sources of cash
include the proceeds from mortgage loans and notes payable. Our main uses of cash will
relate to capital expenditures, required payments of mortgages and notes payable,
distributions and property taxes.

`(UNAUDITED)
                                                          -----------------------------------------------------
                                                                           Three Months Ended
                                                                               March 31,
                                                          -----------------------------------------------------
                                                                    2005                        2004
                                                          --------------------------  -------------------------

Operating activities                                    $             1,841,478     $             1,864,738
Investing activities                                                 (3,644,698)                   (350,792)
Financing activities                                                 14,668,997                  (1,615,378)
                                                          --------------------------  -------------------------

     Net increase (decrease) in cash and equivalents    $            12,865,777     $              (101,432)
                                                          ==========================  =========================`

37

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Cash Flow from Operating Activities

Net
cash provided by operating activities was approximately $1,841,000 for the three months
ended March 31, 2005 and 2004, respectively.

Cash Flow from Investing Activities

Net
cash used in investing activities increased from approximately $351,000 for the three
months ended March 31, 2004 to approximately $3,645,000 for the three months ended March
31, 2005.  The increase is primarily due to externally escrowing.  Increased capital
expenditures include:  HVAC replacements at Blankenbaker Business Center 1A and 1B, roof
replacements at Blankenbaker Business Center II, Park Place Apartments Phase I and Willow
Lake Apartments, vacant suite improvements at Lakeshore Business Center Phases I and II,
and tenant improvements at Commonwealth Business Center Phase I and Springs Office Center.

Cash Flow from Financing Activities

For
the three months ended March 31, 2004, we used approximately $1,615,000 in net cash from
financing activities.  Net cash provided by financing activities was approximately
$14,669,000 for the three months ended March 31, 2005.  The change was primarily the
result of $30,000,000 in loan proceeds obtained in March 2005.  The increase is partially
offset by the payoff of the revolving note payable of approximately $14,971,000.

Future Liquidity

Our
future liquidity depends significantly on our properties' occupancy remaining at a level
which provides for debt payments and adequate working capital, currently and in the
future.  If occupancy were to fall below that level and remain at or below that level for
a significant period of time, our ability to make payments due under our debt agreements
and to continue paying daily operational costs would be greatly impaired.  In the next
twelve months, we intend to operate the properties in a similar manner to their operation
in recent years.  Cash reserves which consist of unrestricted cash as shown on our
balance sheet was approximately $15,440,000 on March 31, 2005.  As part of the merger, we
refinanced approximately $94.0 million of debt with approximately $119.0 million of new
debt.  The refinancing, among other things, lowered interest rates and extended the
amortization schedules.  The refinancing of this debt allowed us to generate cash flow to
pay capital expenditures, principal and interest expenses from mortgages and notes
payable, deferred fees and expenses to NTS Development Company.  Subject to our
distribution policy, we anticipate making quarterly distributions to our limited partners.

On
April 14, 2005, NTS Realty announced that the board of directors of its managing general
partner, NTS Realty Capital, Inc., approved a quarterly distribution of $0.10 per unit on
NTS Realty's limited partnership units.  The distribution will be paid on May 13, 2005,
to limited partners of record at the close of business on April 27, 2005.

We
expect to incur capital expenditures of approximately $9.1 million during the next twelve
months primarily for roof replacements and tenant origination costs necessary to continue
leasing our properties.  This discussion of future liquidity details our material
commitments.

38

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# Item 3 - Quantitative and Qualitative Disclosures About Market Risk

Our
primary  market risk exposure with regard to financial  instruments  is expected to be
our exposure to changes in interest rates. We refinanced  substantially  all of our debt
acquired at the time of our merger with instruments  which bear  interest at a fixed rate
with the  exception  of an  approximately  $14.0  million  mortgage.  We  anticipate
 that a hypothetical  100 basis point  increase in interest rates would result in an
 approximate  $6,500,000  decrease in the fair value of our fixed  rate debt while
 increasing  interest  expense  on our  variable  rate debt by  approximately  $140,000
annually.

# Item 4 - Controls and Procedures

Our
managing general partner established disclosure controls and procedures to ensure that
our material information is made known to the officers of our managing general partner
who certify our financial reports, to our management and to the board of directors of our
managing partner.

As
of March 31, 2005, our managing general partner's Chief Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and procedures are
effective to ensure that the information required to be disclosed by us in the reports
that we file or submit under Securities and Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms.

39

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# PART II - OTHER INFORMATION
Item 1  Legal Proceedings

On
May 6, 2004,  the Superior  Court of the State of  California  for the County of Contra
Costa granted its final approval of the settlement  agreement  jointly filed by the
general partners (the "General  Partners") of the Partnerships, along with certain of
their affiliates,  with the class of plaintiffs in the action originally  captioned
Buchanan,  et al. v. NTS-Properties  Associates,  et al. (Case No. C 01-05090) on
December 5, 2003.  At the final hearing,  any member of the class of plaintiffs was given
the opportunity to object to the final approval of the settlement  agreement,  the entry
of a final judgment  dismissing  with prejudice the Buchanan  litigation,  or an
application of an award for attorneys' fees and expenses to  plaintiffs'  counsel.  The
Superior  Court's order  provided,  among other things,  that:  (1) the  settlement
agreement,  and all  transactions  contemplated  thereby,  including  the  merger of the
 Partnerships  into us,  are fair, reasonable and adequate,  and in the best interests of
the class of plaintiffs;  (2) the plaintiffs' complaint and each and every  cause of
action and claim set forth  therein is  dismissed  with  prejudice;  (3) each class
 member is barred  from transferring,  selling or otherwise  disposing of (other than by
operation of law) their interests until the earlier of the closing date of the merger,
 the  termination  of the  settlement or June 30, 2004; and (4) each class member who
requested to be excluded from the settlement released their claims in the Bohm litigation.

On
June 11, 2004,  Joseph Bohm and David Duval,  class members who objected to the
settlement  agreement but whose objections  were overruled by the Superior Court (the
 "Appellants"),  filed an appeal in the Court of Appeals of the State of California,
 First  Appellate  District.  The Appellants  filed their opening  appellate  brief on
October 22, 2004. The General Partners and the Partnerships,  as well as the class
representatives,  filed their respective responses on February 14, 2005,  and Appellants
 filed their reply.  The appellate  court is in the process of scheduling  oral arguments
on this matter.

On
February  27, 2003,  two  individuals  filed a class and  derivative  action in the
Circuit  Court of Jefferson County,  Kentucky  captioned Bohm, et al. v. J.D.  Nichols,
 et al. (Case No.  03-CI-01740)  against certain of the General Partners  and  several
 individuals  and  entities  affiliated  with us. The  complaint  was amended to include
the general partner of  NTS-Properties  III and the general partner of  NTS-Properties
 Plus Ltd., which is no longer in existence.  In the amended  complaint,  the plaintiffs
 purport to bring claims on behalf of a class of limited  partners and derivatively on
behalf of us and the Partnerships based on alleged  overpayment of fees,  prohibited
 investments,  improper failures to make  distributions,  purchases  of limited
 partnerships  interests at  insufficient  prices and other  violations  of the limited
partnership  agreements.  The plaintiffs are seeking,  among other things,  compensatory
and punitive damages in an unspecified  amount,  an  accounting,  the  appointment  of a
receiver  or  liquidating  trustee,  the entry of an order of dissolution  against the
Partnerships,  a declaratory  judgment and injunctive relief. No amounts have been
accrued for the settlement  of this action in our financial  statements.  The General
 Partners and their legal  counsel  believe that this action is without merit and are
vigorously defending it.

On
March 2,  2004,  the  General  Partners  filed a motion to  dismiss  the Bohm
 litigation.  After the motion to dismiss was fully briefed, the settlement  agreement in
the Buchanan litigation received final court approval.  The Circuit Court of Jefferson
 County,  Kentucky,  instructed  the plaintiffs in the Bohm  litigation to file an
amended  complaint in light of the approved  settlement  of the Buchanan  litigation.
 The  plaintiffs in the Bohm  litigation  filed a corrected second amended  complaint on
August 11, 2004. The General  Partners,  along with all  defendants,  filed a motion to
strike the corrected  second  amended  complaint.  On February 9, 2005,  the Circuit
 Court  instructed  the  defendants to file a responsive

40

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pleading
 only as to direct  claims  asserted  by the  individual  plaintiffs.  On March 9, 2005,
 the  General Partners,  along  with all of the  defendants,  filed:  (1) a motion  to
 dismiss  and (2) a joint  motion to  dismiss  the "corrected"  second  amended
 complaint.  A hearing on these motions is scheduled for July 15, 2005.  The General
 Partners believe that the claims asserted in the "corrected" second amended complaint
have no merit.

# Item 2 
Unregistered Sales of Equity Securities and Use of Proceeds

None.

# Item 3  Defaults Upon Senior Securities

# Item 4  Submission of Matters to a Vote of Security Holders

None.

# Item 5  Other Information

Not Applicable.

# 6  Exhibits

Exhibit No.

|      |                                                                                                                                                                                                                                                                          |    
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---
|2.01  | Agreement and Plan of Merger entered into by and among NTS Realty
Holdings Limited Partnership, NTS-Properties III, NTS-Properties IV, NTS-
Properties V, a Maryland limited partnership, NTS-Properties VI, a Maryland
limited partnership and NTS-Properties VII, Ltd. | (2)
|     
|2.02  | Contribution Agreement entered into by and among NTS Realty Holdings
Limited Partnership and ORIG, LLC.                                                                                                                                                                  | (3)
|     
|3.01  | Certificate of Limited Partnersip of NTS Realty Holdings Limited Partnership.                                                                                                                                                                                            | (5)
|     
|3.02  | Form of Agreement of Limited Partnership of NTS Realty Holdings Limited
Partnership.                                                                                                                                                                                     | (4)
|     
|3.03  | Certificate of Incorporation of NTS Realty Capital, Inc.                                                                                                                                                                                                                 | (5)
|     
|3.04  | Bylaws of NTS Realty Capital, Inc.                                                                                                                                                                                                                                       | (6)
|     
|10.01 | Form of Management Agreement between NTS Realty Holdings Limited
Partnership and NTS Development Company.                                                                                                                                                                | (5)
|     
|10.02 | Lease Agreement dated as of Janaury 12, 2005, between NTS Realty Holdings
Limited Partnership and SHPS, Inc.                                                                                                                                                             | (8)
|     
|14.01 | Code of Conduct and Ethics.                                                                                                                                                                                                                                              | (8)

41

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Exhibit No.

|                |                                                                                                                                                                                                                      |    
|--------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---
|31.1            | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule
15d-14(a) of the Securities Exchange Act, as amended.                                                                                   | (1)
|               
|31.2            | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule
15d-14(a) of the Securities Exchange Act, as amended.                                                                                   | (1)
|               
|32.1            | Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                           | (1)
|               
|32.2            | Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                           | (1)
|               
|99.1            | Form of Lock-up Agreement between NTS Realty Holdings Limited
Partnership and the executive officers of NTS Realty Capital, Inc.                                                                                     | (5)
|               
|99.2            | Registration Statement on Form S-4, as filed by the Registrant with the
Securities and Exchange Commission on October 27, 2004.                                                                                      | (7)
|               
|_______________ |                                                                                                                                                                                                                      |    
|               
|(1)             | Filed as part of this Annual Report on Form 10-K.                                                                                                                                                                   
|               
|(2)             | Incorporated by reference to Appendix B to the Registrants Registration
Statement on Form S-4, as filed by the Registrant with the Securities and
Exchange Commission on October 27, 2004 (file number 333-112467).
|               
|(3)             | Incorporated by reference to Appendix C to the Registrant's Registration
Statement on Form S-4, as filed by the Registrant with the Securities and
Exchange Commission on October 27, 2004 (file number 333-112467).
|               
|(4)             | Incorporated by reference to Appendix D to the Registrant's Registration
Statement on Form S-4, as filed by the Registrant with the Securities and
Exchange Commission on October 27, 2004 (file number 333-112467).
|               
|(5)             | Incorporated by reference to the Registrant's Form S-4, as filed by the
Registrant with the Securities and Exchange Commission on February 4, 2004.                                                                 
|               
|(6)             | Incorporated by reference to Amendment No. 1 to the Form S-4, as filed by the
Registrant with the Securities and Exchange Commission on June 18, 2004.                                                              
|               
|(7)             | Incorporated by refence to the Registrant's Registration Statement on Form
S-4, as filed with the Securities and Exchange Commission on October 27,
2004 (file number 333-112467).                                  
|               
|(8)             | Incorporated by reference to the Registrants annual report on Form 10-K for the year ended
December 31, 2004, as filed by the Registrant with the Securities and Exchange Commission
on March 31, 2005.            

42

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SIGNATURES

Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.

NTS REALTY HOLDINGS LIMITED PARTNERSHIP

By:      NTS REALTY CAPITAL, INC.
            Its:      Managing General Partner

| |     |                                               
| | --- | ----------------------------------------------
| | By: | /s/ Brian F. Lavin                            
| |     |                                               
| |     | Brian F. Lavin                                
| |     | Its:     President and Chief Executive Officer
| |     | Date:  May 13, 2005                           

43