**Table of Contents**

 

 

 

**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

** **

**(Mark One)**

 

**x**QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIESEXCHANGE ACT OF 1934

 

**For the quarterly period ended March 31,2009**

** **

**OR**

 

**o** TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACTOF 1934

 

**For the transition period from                to                 **

 

**Commission file number 001-32389**

 

**NTSREALTY HOLDINGS LIMITED PARTNERSHIP**

(Exactname of registrant as specified in its charter)

** **

| **Delaware**                                      | ** ** | **41-2111139**                           |
|---------------------------------------------------|------------|------------------------------------------|
| **(State of incorporation or organization)**      | ** ** | **(I.R.S. Employer Identification No.)** |
| ** **                                        | ** ** | ** **                               |
| **10172 Linn Station Road  Louisville, Kentucky** | ** ** | **40223**                                |
| (Address  of principal executive offices)         |       | (Zip  Code)                              |

 

**(502) 426-4800**

(Registrant’s telephone number, including area code)

** **

**Not applicable**

(Former name, former address and former fiscal year, if changed sincelast report)

 

Indicate by check mark whether the registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.  **Yes  ****x     No  ****o**

 

Indicate bycheck mark whether the registrant has submitted electronically and posted onits corporate Web site, if any, every Interactive Data File required to be submittedand posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)during the preceding 12 months (or for such shorter period that the registrantwas required to submit and post such files). Yes  o     No  o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reportingcompany.  See definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of the Exchange Act.  (Check one):

 

| Large accelerated filer o |   | Accelerated filer o         |
|---------------------------|--------|-----------------------------|
|                      |   |                        |
| Non-accelerated filer o   |   | Smaller reporting company x |

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).  **Yes  ****o****     No  ****x**

 

**APPLICABLEONLY TO CORPORATE ISSUERS**

** **

As of May 8, 2009, there were 11,380,760 of the registrant’slimited partnership units outstanding.

 

 

 

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**NTSREALTY HOLDINGS LIMITED PARTNERSHIP**

** **

**FORM 10-Q**

** **

**TABLEOF CONTENTS**

** **
| **PART I —  FINANCIAL INFORMATION**                                                   | **4**                                                                                       |
|-------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|
| ** **                                                                                      | ** **                                                                                  |
| Item 1                                                                                          | Financial  Statements                                                                       | 4 |
| Consolidated  Balance Sheets as of March 31, 2009 and December 31, 2008               | 4                                                                                           |
| Consolidated  Statement of Partners’ Equity as of March 31, 2009                      | 4                                                                                           |
| Consolidated  Statements of Operations for the Three Months Ended March 31, 2009 and  2008 | 5                                                                                           |
| Consolidated  Statements of Cash Flows for the Three Months Ended March 31, 2009 and  2008 | 6                                                                                           |
| Notes to Consolidated Financial Statements                                                      | 7                                                                                           |
| Item 2                                                                                          | Management’s Discussion  and Analysis of Financial Condition and Results of Operations | 18 |
| Item 3                                                                                          | Quantitative  and Qualitative Disclosures About Market Risk                                 | 25 |
| Item 4                                                                                          | Controls  and Procedures                                                                    | 25 |
| Item 4T                                                                                         | Controls  and Procedures                                                                    | 25 |
|                                                                                            |                                                                                        |
| **PART II  — OTHER INFORMATION**                                                      | **26**                                                                                      |
| ** **                                                                                      | ** **                                                                                  |
| Item 1                                                                                          | Legal  Proceedings                                                                          | 26 |
| Item 1A                                                                                         | Risk  Factors                                                                               | 26 |
| Item 2                                                                                          | Unregistered  Sales of Equity Securities and Use of Proceeds                                | 26 |
| Item 3                                                                                          | Defaults Upon  Senior Securities                                                            | 27 |
| Item 4                                                                                          | Submission of  Matters to a Vote of Security Holders                                        | 27 |
| Item 5                                                                                          | Other  Information                                                                          | 27 |
| Item 6                                                                                          | Exhibits                                                                                    | 28 |
| SIGNATURES                                                                                      | 30                                                                                          |

 

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**INFORMATION REGARDINGFORWARD-LOOKING STATEMENTS**

** **

Some of thestatements included in this quarterly report on Form 10-Q, particularlythose included in Part I, Item 2 — Management’s Discussion and Analysis ofFinancial Condition and Results of Operations (“MD&A”), may be considered “forward-lookingstatements” because the statements relate to matters which have not yetoccurred.  For example, phrases such as “weanticipate,” “believe” or “expect” indicate that it is possible that the eventanticipated, 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 maybe more or less favorable to us.  We donot undertake any obligation to update these forward-looking statements.

 

Anyforward-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 anyforward-looking statements as a result of a number of factors, including butnot limited to those described in our filings with the Securities and ExchangeCommission, particularly our most recent annual report on Form 10-K, whichwas filed on March 31, 2009.  Any forward-lookinginformation provided by us pursuant to the safe harbor established by thePrivate Securities Litigation Reform Act of 1995 should be evaluated in thecontext of these factors.

 

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# **PART I — FINANCIALINFORMATION**

## **Item1 — Financial Statements**

## ** **

**NTS REALTY HOLDINGS LIMITEDPARTNERSHIP**

### Consolidated BalanceSheets as of March 31, 2009 and December 31, 2008

 
| ** **                                                                                                                             | ** ** | **(Unaudited)**              | ** **  | ** **                      | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|-------------|---------------------------------|------------|
| ** **                                                                                                                             | ** ** | **March 31, 2009** | ** **  | **December 31, 2008** | ** ** |
| **ASSETS:**                                                                                                                            |       |                         |        |                            |       |
| Cash and equivalents                                                                                                                   |       | $                            | 287,840     |                            | $          | - |   |
| Cash and equivalents - restricted                                                                                                      |       | 726,969                      |        | 554,115                         |       |
| Accounts receivable, net of allowance for  doubtful accounts of $113,454 at March 31, 2009 and $90,932 at  December 31, 2008 |       | 1,589,275                    |        | 1,642,311                       |       |
| Notes receivable                                                                                                                       |       | 3,500,000                    |        | 3,500,000                       |       |
| Land, buildings and amenities, net                                                                                                     |       | 275,121,019                  |        | 278,847,073                     |       |
| Investments in and advances to tenants in  common                                                                                      |       | 5,911,951                    |        | 6,432,165                       |       |
| Other assets                                                                                                                           |       | 2,844,206                    |        | 3,139,415                       |       |
|                                                                                                                                   |       |                         |        |                            |       |
| **Total assets**                                                                                                                       |       | $                            | 289,981,260 |                            | $          | 294,115,079 |   |
|                                                                                                                                   |       |                         |        |                            |       |
| **LIABILITIES:**                                                                                                                       |       |                         |        |                            |       |
| Mortgages and notes payable                                                                                                            |       | $                            | 203,533,804 |                            | $          | 203,561,669 |   |
| Accounts payable and accrued expenses                                                                                                  |       | 1,979,949                    |        | 2,637,291                       |       |
| Accounts payable and accrued expenses due  to affiliate                                                                                |       | 316,561                      |        | 267,388                         |       |
| Distributions payable                                                                                                                  |       | 569,038                      |        | 569,038                         |       |
| Security deposits                                                                                                                      |       | 812,363                      |        | 821,999                         |       |
| Other liabilities                                                                                                                      |       | 4,892,881                    |        | 5,168,237                       |       |
|                                                                                                                                   |       |                         |        |                            |       |
| **Total liabilities**                                                                                                                  |       | 212,104,596                  |        | 213,025,622                     |       |
|                                                                                                                                   |       |                         |        |                            |       |
| COMMITMENTS AND CONTINGENCIES (NOTE 12)                                                                                                |       |                         |        |                            |       |
|                                                                                                                                   |       |                         |        |                            |       |
| **PARTNERS’ EQUITY**                                                                                                              |       | 77,876,664                   |        | 81,089,457                      |       |
|                                                                                                                                   |       |                         |        |                            |       |
| **Total liabilities and partners’ equity**                                                                                        |       | $                            | 289,981,260 |                            | $          | 294,115,079 |   |

 

**NTS REALTY HOLDINGS LIMITEDPARTNERSHIP**

### Consolidated Statementof Partners’ Equity as of March 31, 2009

(Unaudited)

 
| ** **                                           | ** ** | **General  Partner  Interests** | ** ** | **Limited  Partners’  Interests** | ** ** | **General  Partner** | ** ** | **Limited  Partners’** | ** ** | **Total**   | ** ** |
|------------------------------------------------------|------------|---------------------------------|------------|----------------------------------------|------------|----------------------|------------|-----------------------------|------------|-------------|------------|
| **PARTNERS’ EQUITY:**                           |       |                            |       |                                   |       |                 |       |                        |       |        |       |
| Initial equity                                       |       | 714,491                         |       | 10,667,117                             |       | $                    | 3,131,381  |                        | $          | 46,750,444  |       | $ | 49,881,825 |   |
| Net income prior years                               |       | -                               |       | -                                      |       | 3,181,067            |       | 47,488,513                  |       | 50,669,580  |       |
| Net loss current year                                |       | -                               |       | -                                      |       | (165,977             | )          | (2,477,778                  | )          | (2,643,755  | )          |
| Cash distributions declared to date                  |       | -                               |       | -                                      |       | (1,257,557           | )          | (18,773,429                 | )          | (20,030,986 | )          |
| Retirement of limited partnership interests  to date |       | -                               |       | (848                                   | )          | -                    |       | -                           |       | -           |       |
|                                                 |       |                            |       |                                   |       |                 |       |                        |       |        |       |
| Balances on March 31, 2009                      |       | 714,491                         |       | 10,666,269                             |       | $                    | 4,888,914  |                        | $          | 72,987,750  |       | $ | 77,876,664 |   |

 

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

 

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**NTS REALTY HOLDINGS LIMITEDPARTNERSHIP**

### Consolidated Statementsof Operations for the Three Months Ended March 31, 2009 and 2008

(Unaudited)

 
| ** **                                                         | ** ** | **Three Months Ended  March 31,** | ** ** |
|--------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                         | ** ** | **2009**                                         | ** ** | **2008** | ** ** |
| ** **                                                         | ** ** | ** **                                       |       | **Restated** |   |
| **REVENUE:**                                                       |       |                                             |       |   |   |
| Rental income                                                      |       | $                                                | 10,232,630 |   | $ | 9,485,553 |   |
| Tenant reimbursements                                              |       | 455,828                                          |       | 402,021 |   |
|                                                               |       |                                             |       |   |   |
| **Total revenue**                                                  |       | 10,688,458                                       |       | 9,887,574 |   |
|                                                               |       |                                             |       |   |   |
| **EXPENSES:**                                                      |       |                                             |       |   |   |
| Operating expenses                                                 |       | 2,123,037                                        |       | 1,722,429 |   |
| Operating expenses reimbursed to affiliate                         |       | 1,171,591                                        |       | 1,055,381 |   |
| Management fees                                                    |       | 530,551                                          |       | 499,061 |   |
| Property taxes and insurance                                       |       | 1,480,233                                        |       | 1,138,478 |   |
| Professional and administrative expenses                           |       | 287,992                                          |       | 299,867 |   |
| Professional and administrative expenses  reimbursed to affiliate  |       | 392,981                                          |       | 438,822 |   |
| Depreciation and amortization                                      |       | 4,124,492                                        |       | 3,297,587 |   |
|                                                               |       |                                             |       |   |   |
| **Total operating expenses**                                       |       | 10,110,877                                       |       | 8,451,625 |   |
|                                                               |       |                                             |       |   |   |
| **OPERATING INCOME**                                               |       | 577,581                                          |       | 1,435,949 |   |
|                                                               |       |                                             |       |   |   |
| Interest and other income                                          |       | 63,987                                           |       | 5,157 |   |
| Interest expense                                                   |       | (2,753,354                                       | )          | (2,908,605 | ) |
| Loss on disposal of assets                                         |       | (11,755                                          | )          | (53,193 | ) |
| Loss from investments in tenants in common                         |       | (520,214                                         | )          | (619,019 | ) |
|                                                               |       |                                             |       |   |   |
| **LOSS FROM CONTINUING OPERATIONS**                                |       | (2,643,755                                       | )          | (2,139,711 | ) |
| Discontinued operations, net                                       |       | -                                                |       | 574,152 |   |
|                                                               |       |                                             |       |   |   |
| **NET LOSS**                                                       |       | $                                                | (2,643,755 | ) | $ | (1,565,559 | ) |
|                                                               |       |                                             |       |   |   |
| **Loss from continuing operations allocated  to limited partners** |       | $                                                | (2,477,778 | ) | $ | (2,005,378 | ) |
| Discontinued operations, net allocated to  limited partners        |       | -                                                |       | 538,106 |   |
|                                                               |       |                                             |       |   |   |
| **NET LOSS ALLOCATED TO LIMITED PARTNERS**                         |       | $                                                | (2,477,778 | ) | $ | (1,467,272 | ) |
|                                                               |       |                                             |       |   |   |
| **Loss from continuing operations per limited  partnership unit**  |       | $                                                | (0.23      | ) | $ | (0.19 | ) |
| Discontinued operations, net per limited  partnership unit         |       | -                                                |       | 0.05 |   |
|                                                               |       |                                             |       |   |   |
| **NET LOSS PER LIMITED PARTNERSHIP UNIT**                          |       | $                                                | (0.23      | ) | $ | (0.14 | ) |
|                                                               |       |                                             |       |   |   |
| **Weighted average number of limited  partnership interests**      |       | 10,666,269                                       |       | 10,666,269 |   |

 

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

 

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**NTS REALTY HOLDINGS LIMITEDPARTNERSHIP**

### Consolidated Statementsof Cash Flows for the Three Months Ended March 31, 2009 and 2008

(Unaudited)

 
| ** **                                                                       | ** ** | **2009**   | ** ** | **2008**     | ** ** |
|----------------------------------------------------------------------------------|------------|------------|------------|--------------|------------|
| ** **                                                                       | ** ** | ** ** | ** ** | **Restated** | ** ** |
| **OPERATING ACTIVITIES:**                                                        | ** ** | ** ** | ** ** | ** **   | ** ** |
| **Net loss**                                                                     |       | $          | (2,643,755 | )            | $          | (1,565,559 | ) |
| Adjustments to reconcile net loss to net  cash provided by operating activities: |       |       |       |         |       |
| Loss on disposal of assets                                                       |       | 11,755     |       | 53,193       |       |
| Depreciation and amortization                                                    |       | 4,292,598  |       | 3,469,090    |       |
| Loss from investments in tenants in common                                       |       | 520,214    |       | 619,019      |       |
| **Changes in assets and liabilities:**                                           |       |       |       |         |       |
| Cash and equivalents - restricted                                                |       | (172,854   | )          | 18,217       |       |
| Accounts receivable                                                              |       | 72,583     |       | (6,734       | )          |
| Other assets                                                                     |       | (692       | )          | (114,653     | )          |
| Accounts payable and accrued expenses                                            |       | (657,342   | )          | (1,027,193   | )          |
| Accounts payable and accrued expenses due  to affiliate                          |       | 49,173     |       | (209,372     | )          |
| Security deposits                                                                |       | (9,636     | )          | 3,698        |       |
| Other liabilities                                                                |       | (275,356   | )          | 1,571,826    |       |
|                                                                             |       |       |       |         |       |
| **Net cash provided by operating activities**                                    |       | 1,186,688  |       | 2,811,532    |       |
|                                                                             |       |       |       |         |       |
| **INVESTING ACTIVITIES:**                                                        |       |       |       |         |       |
| Additions to land, buildings and amenities                                       |       | (301,945   | )          | (1,414,836   | )          |
|                                                                             |       |       |       |         |       |
| **Net cash used in investing activities**                                        |       | (301,945   | )          | (1,414,836   | )          |
|                                                                             |       |       |       |         |       |
| **FINANCING ACTIVITIES:**                                                        |       |       |       |         |       |
| Proceeds from mortgages payable                                                  |       | -          |       | 6,182,000    |       |
| Revolving note payable, net                                                      |       | 804,403    |       | (4,934,927   | )          |
| Principal payments on mortgages payable                                          |       | (832,268   | )          | (723,527     | )          |
| Additions to loan costs                                                          |       | -          |       | (19,370      | )          |
| Cash distributions                                                               |       | (569,038   | )          | (1,138,076   | )          |
|                                                                             |       |       |       |         |       |
| **Net cash used in financing activities**                                        |       | (596,903   | )          | (633,900     | )          |
|                                                                             |       |       |       |         |       |
| **NET INCREASE IN CASH AND EQUIVALENTS**                                         |       | 287,840    |       | 762,796      |       |
|                                                                             |       |       |       |         |       |
| **CASH AND EQUIVALENTS, beginning of period**                                    |       | -          |       | 845,337      |       |
|                                                                             |       |       |       |         |       |
| **CASH AND EQUIVALENTS, end of period**                                          |       | $          | 287,840    |         | $          | 1,608,133 |   |

 

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

 

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**NTS REALTY HOLDINGS LIMITEDPARTNERSHIP**

### Notes to ConsolidatedFinancial Statements

(Unaudited)

 

The unauditedconsolidated financial statements included herein should be read in conjunctionwith NTS Realty Holdings Limited Partnership’s (“NTS Realty”) 2008 annualreport on Form 10-K as filed with the Securities and Exchange Commissionon March 31, 2009.  In the opinionof NTS Realty Capital, Inc., our managing general partner, alladjustments, consisting only of normal recurring accruals, necessary for a fairpresentation have been made to the accompanying consolidated financialstatements for the three months ended March 31, 2009 and 2008.  The results of operations for the interimperiods are not necessarily indicative of the results that may be expected forthe 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 inits properties and tenants in common.

 

**Note 1 —Summary of Significant Accounting Policies**

 

***Organization and Distribution Policy***

*** ***

We are in thebusiness of developing, constructing, owning and operating multifamilyproperties, commercial and retail real estate. As of March 31, 2009, we owned wholly or as a tenant in common withan unaffiliated third party, 22 properties, comprised of 12 multifamilyproperties, 7 office and business centers and 3 retail properties.  The properties are located in and aroundLouisville (8) and Lexington (1), Kentucky, Fort Lauderdale (3), Florida,Indianapolis (4), Indiana, Memphis (1) and Nashville (2), Tennessee,Richmond (2), Virginia and Atlanta (1), Georgia.  Our office and business centers aggregateapproximately 670,000 square feet.  Weown multifamily properties containing 3,672 units and retail propertiescontaining approximately 210,000 square feet.

 

We paydistributions if and when authorized by our managing general partner.  We are required to pay distributions on aquarterly basis, equal to sixty-five percent (65%) of our “net cash flow fromoperations” as this term is defined in regulations promulgated by the TreasuryDepartment under the Internal Revenue Code of 1986, as amended; provided thatif a law is enacted or existing law is modified or interpreted in a manner thatsubjects us to taxation as a corporation or otherwise subjects us to entitylevel taxation for federal, state or local income tax purposes, we will adjustthe amount distributed to reflect our obligation to pay tax.  Any distribution other than a distributionwith respect to the final quarter of a calendar year will be made no later thanforty-five (45) days after the last day of such quarter based on our estimateof “net cash flow from operations” for the year.  Any distribution with respect to the finalquarter of a calendar year will be made no later than ninety (90) days afterthe last day of such quarter based on actual “net cash flow from operations”for the year, adjusted for any excess or insufficient distributions made withrespect to the first three quarters of the calendar year.

 

“Net cash flowfrom operations” may be reduced by the amount of reserves as determined by useach quarter.  Our managing general partnerwill establish these reserves for, among other things, working capital orcapital improvement needs.  Therefore,there is no assurance that we will have “net cash flow from operations” fromwhich to pay distributions in the future. For example, our partnership agreement permits our managing generalpartner to reinvest sales or refinancing proceeds in new and existingproperties or to create reserves to fund future capital expenditures.  Because “net cash flow from operations” iscalculated after reinvesting sales or refinancing proceeds or establishingreserves, we may not have any “net cash flow from operations” from which to paydistributions.

 

We paid aquarterly distribution of $0.05 per unit to limited partners on April 17,2009.

 

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***Basis of Presentation***

*** ***

Theconsolidated financial statements include the accounts of all wholly-ownedproperties.  Our properties owned as atenant in common with an unaffiliated third party are accounted for under theequity method.  Intercompany transactionsand balances have been eliminated.  Theseproperties owned as tenants in common had previously been consolidated in our2008 financial statements.  All priorperiod information has been restated to reflect our current policy ofaccounting for these properties using the equity method.  The following presents the effect of therestatement on operating results and cash flows for the three months ended March 31,2008:

 
| ** **                                                     | ** ** | **Three Months Ended March 31, 2008** | ** ** |
|----------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                     | ** ** | **Restated**                                                   | ** ** | **Previously  Reported** | ** ** |
| **Operating results:**                                         |       |                                                           |       |   |   |
| Total revenue                                                  |       | $                                                              | 9,887,574  |   | $ | 11,389,013 |   |
| Operating income                                               |       | 1,435,949                                                      |       | 921,477 |   |
| Discontinued operations, net                                   |       | 574,152                                                        |       | 738,815 |   |
| Loss from continuing operations allocated  to limited partners |       | (2,005,378                                                     | )          | (2,156,892 | ) |
| Discontinued operations, net allocated to  limited partners    |       | 538,106                                                        |       | 689,620 |   |
| Loss from continuing operations per limited  partnership unit  |       | (0.19                                                          | )          | (0.20 | ) |
| Discontinued operations, net per limited  partnership unit     |       | 0.05                                                           |       | 0.06 |   |
|                                                           |       |                                                           |       |   |   |
| **Cash flows:**                                                |       |                                                           |       |   |   |
| Net cash provided by operating activities                      |       | 2,811,532                                                      |       | 3,068,515 |   |
| Net cash used in investing activities                          |       | (1,414,836                                                     | )          | (1,470,477 | ) |
| Net cash used in financing activities                          |       | (633,900                                                       | )          | (746,167 | ) |
|                                                                |            |                                                                |            |  |  |  |  |

 

***Fair Value Measurements***

*** ***

In September 2006,the Financial Accounting Standards Board (“FASB”) issued Statement of FinancialAccounting Standards (“SFAS”) No. 157 “Fair Value Measurements”**(“SFAS 157”).  SFAS157 requires companies to determine fair value based on the price that would bereceived to sell the asset or paid to transfer the liability to a marketparticipant.  SFAS 157 emphasizes thatfair value is a market-based measurement, not an entity-specificmeasurement.  The provisions of SFAS 157were effective as of January 1, 2008; however, FASB Staff Position No. 157-2(“FSP 157-2”) deferred the effective date for certain non-financial assets andliabilities not re-measured at fair value on a recurring basis to fiscal yearsbeginning after November 15, 2008 or our first quarter of 2009.  The adoption of FSP 157-2 did not have anyimpact.

 

SFAS No. 157requires that assets and liabilities carried at fair value be classified anddisclosed in one of the following categories:

 

·                  Level 1:  Quoted market prices in active markets foridentical assets or liabilities.

 

·                  Level 2:  Observable market based inputs orunobservable inputs that are corroborated by market data.

 

·                  Level 3:  Unobservable inputs that are not corroboratedby market data.

 

Our financialassets and liabilities that are measured at fair value on a recurring basis asof March 31, 2009 are approximately as follows:

 

| ** **                 | ** ** | **Carrying** | ** ** | **Fair Value Measurements** | ** ** |
|----------------------------|------------|--------------|------------|---------------------------------------|------------|
| ** **                 | ** ** | **Value**    | ** ** | **Level 1**                      | ** ** | **Level 2** | ** ** | **Level 3** | ** ** |
| **Financial liabilities:** |       |         |       |                                  |       |   |   |   |   |
| Interest rate swap         |       | $            | 303,000    |                                  | $          | - |   | $ | 303,000 |   | $ | - |   |
|                            |            |              |            |                                       |            |  |  |  |  |  |  |  |  |

 

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In December 2007,the FASB issued SFAS No. 160 “Noncontrolling Interests in ConsolidatedFinancial Statements (“SFAS 160”)”.  SFAS160 clarifies that a noncontrolling interest in a subsidiary is an ownershipinterest in a consolidated entity, which should be reported as equity in theparent’s consolidated financial statements. SFAS 160 is effective for fiscal years beginning after December 15,2008.  The adoption of SFAS 160 did nothave any impact.

 

**Note 2 —Use of Estimates and Reclassifications in the Preparation of FinancialStatements**

 

Thepreparation of financial statements in accordance with U.S. generally acceptedaccounting principles requires us to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period.  Actual results could differ from thoseestimates.

 

Certainreclassifications have been made to the prior period financial statements toconform with March 31, 2009 classifications.  Our NTS Center property was reclassifiedduring 2008 from discontinued operations to continuing operations as it is nolonger classified as held for sale on our balance sheet.  This reclassification did not have a materialimpact on the related financial statement line items on our consolidatedbalance sheets or statement of operations and no effect on previously reportedoperating results or partners’ equity.

 

**Note 3 —Real Estate Transactions**

 

***Acquisitions***

*** ***

Theacquisitions of wholly-owned properties prior to January 1, 2009 wereaccounted for using the purchase method of accounting in accordance withStatement of Financial Accounting Standards (“SFAS”) No. 141 “BusinessCombinations”.  The assets andliabilities purchased are recorded at their fair market value at the date ofthe acquisition.  We allocate thepurchase price for each of the properties to net tangible and identifiedintangible assets acquired based on fair values (including land, buildings,tenant improvements, acquired above and below market leases and the originationcost of acquired in-place leases) and acquired liabilities.  The intangible assets recorded in relation toour multifamily properties will be amortized over a period of one year, whichapproximates the weighted average lease lives. No above or below market leases exist. No customer relationship intangibles exist.  At the date of the acquisition, the carryingvalue of mortgages and other liabilities approximated fair market value.  We retained an independent appraiser toassess fair value based on estimated cash flow projections that utilizediscount and capitalization rates deemed appropriate and available marketinformation.  Our tenant in common withan unaffiliated third party properties acquired were accounted for using theequity method.

 

We adoptedSFAS No. 141 “Business Combinations” revised 141R on January 1, 2009,which requires us to expense acquisition costs as incurred.

 

During thethree months ended March 31, 2009, we did not acquire any properties.

 

On April 10, 2009, we entered into an agreement to purchase twomultifamily properties located in Orlando, Florida known as Sabal ParkApartments (“Sabal Park”) and Golf Brook Apartments (“Golf Brook”).  Subject to the terms and conditions of theagreement, we agreed to an aggregate purchase price of $32.5 million to acquireSabal Park and Golf Brook.  Sabal Park isa 162-unit luxury apartment community, while Golf Brook is a 195-unit luxury apartmentcommunity, both offering amenities such as a fitness center, resort-style pooland custom home features.  We maypurchase these properties with a joint venture partner or as a tenant in commonwith an unaffiliated third party.

 

***Dispositions***

*** ***

During thethree months ended March 31, 2009, we did not dispose of any properties.

 

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***Discontinued Operations and Long Lived Assets and Liabilities Held forSale***

*** ***

In May 2008,we sold Atrium Center, Blankenbaker Business Center I, Blankenbaker BusinessCenter II, Anthem Office Center, NTS Center, Plainview Center, Plainview PointOffice Center Phase I and II, Plainview Point Office Center Phase III, and theITT Parking Lot (the “Office Portfolio”). Our NTS Center property was reclassified during 2008 from discontinuedoperations to continuing operations, as it is no longer classified as held forsale on our balance sheet.  All priorperiods presented have been reclassified as discontinued operations.

 

We havepresented separately as discontinued operations in all periods the results ofoperations for the following properties:

 
| **Property**                                  | ** ** | **Location**   | ** ** | **Date of  Sale** | ** ** |
|-----------------------------------------------|------------|----------------|------------|-------------------|------------|
| Atrium  Center                                |       | Louisville, KY |       | May 2008     |       |
| Blankenbaker  Business Center I               |       | Louisville, KY |       | May 2008     |       |
| Blankenbaker  Business Center II              |       | Louisville, KY |       | May 2008     |       |
| Anthem  Office Center                         |       | Louisville, KY |       | May 2008     |       |
| Plainview  Center                             |       | Louisville, KY |       | May 2008     |       |
| Plainview  Point Office Center Phase I and II |       | Louisville, KY |       | May 2008     |       |
| Plainview  Point Office Center Phase III      |       | Louisville, KY |       | May 2008     |       |
| ITT  Parking Lot                              |       | Louisville, KY |       | May 2008     |       |

 

The componentsof discontinued operations are outlined below and include the results ofoperations for the period in which we owned such assets during the three monthsended March 31, 2008.

 

| ** **                                                         | ** ** | **(Unaudited)**                                        | ** ** |
|--------------------------------------------------------------------|------------|--------------------------------------------------------|------------|
| ** **                                                         | ** ** | **Three Months  Ended  March 31, 2008** | ** ** |
| **REVENUE:**                                                       |       |                                                   |       |
| Rental income                                                      |       | $                                                      | 1,747,295  |   |
| Tenant reimbursements                                              |       | 141,777                                                |       |
|                                                               |       |                                                   |       |
| **Total revenue**                                                  |       | 1,889,072                                              |       |
|                                                               |       |                                                   |       |
| **EXPENSES:**                                                      |       |                                                   |       |
| Operating expenses and operating expenses  reimbursed to affiliate |       | 596,205                                                |       |
| Management fees                                                    |       | 90,625                                                 |       |
| Property taxes and insurance                                       |       | 141,883                                                |       |
| Depreciation and amortization                                      |       | 7,771                                                  |       |
|                                                               |       |                                                   |       |
| **Total operating expenses**                                       |       | 836,484                                                |       |
|                                                               |       |                                                   |       |
| **DISCONTINUED OPERATING INCOME**                                  |       | 1,052,588                                              |       |
|                                                               |       |                                                   |       |
| Interest and other income                                          |       | 5,812                                                  |       |
| Interest expense                                                   |       | (484,248                                               | )          |
| Loss on disposal of assets                                         |       | -                                                      |       |
|                                                               |       |                                                   |       |
| **Discontinued operations, net**                                   |       | $                                                      | 574,152    |   |

 

**Note 4 —Concentration of Credit Risk**

 

We own andoperate, either wholly or as a tenant in common with an unaffiliated thirdparty, multifamily, commercial and retail properties in Louisville andLexington, Kentucky; Fort Lauderdale, Florida; Indianapolis, Indiana; Memphisand Nashville, Tennessee; Richmond, Virginia and Atlanta, Georgia.

 

Our financialinstruments that are exposed to concentrations of credit risk consist of cashand equivalents and cash and equivalents - restricted.  We maintain our cash accounts primarily withbanks located in Kentucky.  The totalcash balances are currently insured by the FDIC up to $250,000 per bankaccount.  At March 31, 2009, we mayat times, in certain accounts, have deposits in excess of $250,000 per bankaccount.

 

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**Note 5 —Cash and Equivalents**

 

Cash andequivalents include cash on hand and short-term, highly liquid investments withinitial maturities of three months or less. We have a cash management program, which provides for the overnightinvestment of excess cash balances. Under an agreement with a bank, excess cash is invested in a mutual fundfor U.S. government and agency securities each night.

 

**Note 6 —Cash and Equivalents - Restricted**

 

Cash andequivalents - restricted represents cash on hand and short-term, highly liquidinvestments with initial maturities of three months or less which have beenescrowed with certain mortgage companies and banks for property taxes,insurance and tenant improvements in accordance with certain loan and leaseagreements and certain security deposits.

 

**Note 7 —Property and Depreciation**

 

Land,buildings and amenities are stated at cost. Costs directly associated with the acquisition, development andconstruction of a project are capitalized. Depreciation is computed using the straight-line method over theestimated useful lives of the assets, which are generally 5-30 years for land improvements,7-30 years for buildings and improvements and 5-30 years for amenities.  Tenant improvements are generally depreciatedover the life of the initial or renewal term of the respective tenantlease.  Depreciation expense fromcontinuing operations for the three months ended March 31, 2009 and 2008was approximately $4,016,000 and $3,283,000, respectively.

 

SFAS No. 144“Accounting for the Impairment or Disposal of Long-Lived Assets,” specifiescircumstances in which certain long-lived assets must be reviewed forimpairment.  If the carrying amount of anasset exceeds the sum of its expected future cash flows, the asset’s carryingvalue must be written down to fair value. In determining the value of an investment property and whether theinvestment property is impaired, management considers several factors such asprojected rental and vacancy rates, property operating expenses, capitalexpenditures and interest rates.  Thecapitalization rate used to determine property valuation is based on the marketin which the investment property is located, length of leases, tenant financialstrength, the economy in general, demographics, environment, property location,visibility, age and physical condition among others.  All of these factors are considered by managementin determining the value of any particular investment property.  The value of any particular investmentproperty is sensitive to the actual results of any of these factors, eitherindividually or taken as a whole.  If theactual results differ from management’s judgment, the valuation could benegatively or positively affected. Application of this standard during the three months ended March 31,2009 and 2008 did not result in an impairment loss.

 

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**Note 8 — Investments in and Advances to Tenants in Common**

 

We own a tenant in common interest in and operate the followingproperties:

 

·                  The Overlook atSt. Thomas; a 484-unit luxury apartment complex in Louisville, Kentucky.  We own a 60% interest as a tenant in commonwith an unaffiliated third party.

·                  Creek’s Edge atStony Point; a 202-unit luxury apartment complex in Richmond, Virginia.  We own a 51% interest as a tenant in commonwith an unaffiliated third party.

 

Presented below are the summarized balance sheets and statements ofoperations for these properties:

 
| ** **                              | ** ** | **(Unaudited)**              | ** ** | ** **                      | ** ** |
|-----------------------------------------|------------|------------------------------|------------|---------------------------------|------------|
| ** **                              | ** ** | **March 31, 2009** | ** ** | **December 31, 2008** | ** ** |
| **Summarized Balance Sheets**           |       |                         |       |                            |       |
| Land, buildings and amenities           |       | $                            | 69,706,990 |                            | $          | 70,726,877 |   |
| Other, net                              |       | 1,705,398                    |       | 1,525,783                       |       |
| Total assets                            |       | $                            | 71,412,388 |                            | $          | 72,252,660 |   |
|                                    |       |                         |       |                            |       |
| Mortgages payable and other liabilities |       | $                            | 58,791,141 |                            | $          | 58,697,143 |   |
| Equity                                  |       | 12,621,247                   |       | 13,555,517                      |       |
| Total liabilities and equity            |       | $                            | 71,412,388 |                            | $          | 72,252,660 |   |

 
| ** **                              | ** ** | **(Unaudited)  Three Months Ended** | ** ** |
|-----------------------------------------|------------|-----------------------------------------------|------------|
| ** **                              | ** ** | **March 31, 2009**                  | ** ** | **March 31, 2008** | ** ** |
| **Summarized Statements of Operations** |       |                                          |       |   |   |
| Revenue                                 |       | $                                             | 2,012,948  |   | $ | 1,922,790 |   |
| Operating Loss                          |       | $                                             | (86,323    | ) | $ | (256,490 | ) |
| Net Loss                                |       | $                                             | (934,271   | ) | $ | (1,118,589 | ) |

 

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**Note 9 —Mortgages and Note Payable**

 

Mortgages andnote payable consist of the following:

 
| ** **                                                                                                                                                                                                                                                                                                                                                                                         | ** ** | **(Unaudited)**              | ** **  | ** **                      | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|-------------|---------------------------------|------------|
| ** **                                                                                                                                                                                                                                                                                                                                                                                         | ** ** | **March 31, 2009** | ** **  | **December 31, 2008** | ** ** |
| Mortgage payable to an insurance company in  monthly installments of principal and interest, bearing fixed interest at  5.07%, maturing on March 15, 2015, secured by certain land, buildings  and amenities, with a carrying value of $41,658,273                                                                                                                                            |       | $                            | 27,353,315  |                            | $          | 27,534,884 |   |
|                                                                                                                                                                                                                                                                                                                                                                                               |       |                         |        |                            |       |
| Mortgage payable to a bank in monthly  installments of principal and interest, bearing interest at a variable rate  based on LIBOR one-month rate plus 1.8%, currently 2.30%, due June 1,  2009, secured by certain land, buildings and amenities, with a carrying value  of $17,045,876 and an $800,880 letter of credit. The mortgage is guaranteed  by Mr. Nichols and Mr. Lavin |       | 23,814,000                   |        | 23,907,000                      |       |
|                                                                                                                                                                                                                                                                                                                                                                                               |       |                         |        |                            |       |
| Mortgage payable to an insurance company in  monthly installments of principal and interest, bearing fixed interest at  5.98%, maturing January 15, 2015, secured by certain land, buildings and  amenities, with a carrying value of $144,702,966                                                                                                                                            |       | 70,756,299                   |        | 71,041,740                      |       |
|                                                                                                                                                                                                                                                                                                                                                                                               |       |                         |        |                            |       |
| Mortgage payable to an insurance company in  monthly installments of principal and interest, bearing fixed interest at  5.35%, maturing January 15, 2015, secured by certain land, buildings and  amenities, with a carrying value of $144,702,966                                                                                                                                            |       | 31,869,994                   |        | 32,001,720                      |       |
|                                                                                                                                                                                                                                                                                                                                                                                               |       |                         |        |                            |       |
| Revolving note payable to a bank for $15.0  million, with interest payable in monthly installments, unsecured, at a  variable rate based on LIBOR plus 1.75%, currently 2.26%, due May 31,  2009                                                                                                                                                                                              |       | 7,286,552                    |        | 6,482,149                       |       |
|                                                                                                                                                                                                                                                                                                                                                                                               |       |                         |        |                            |       |
| Mortgage payable to a bank in monthly  installments of principal and interest, bearing fixed interest at 9.0%,  maturing August 1, 2010, secured by certain land, buildings and  amenities, with a carrying value of $2,619,870                                                                                                                                                               |       | 2,382,771                    |        | 2,412,387                       |       |
|                                                                                                                                                                                                                                                                                                                                                                                               |       |                         |        |                            |       |
| Mortgage payable to an insurance company in  monthly installments of principal and interest, bearing fixed interest at  8.45%, maturing November 1, 2015, secured by certain land and a  building, with a carrying value of $2,016,884                                                                                                                                                        |       | 2,216,077                    |        | 2,277,378                       |       |
|                                                                                                                                                                                                                                                                                                                                                                                               |       |                         |        |                            |       |
| Mortgage payable to a bank in monthly  installments of principal and interest, bearing fixed interest at 5.11%,  maturing December 1, 2014, secured by certain land, buildings and  amenities, with a carrying value of $12,590,914                                                                                                                                                           |       | 11,526,296                   |        | 11,575,911                      |       |
|                                                                                                                                                                                                                                                                                                                                                                                               |       |                         |        |                            |       |
| Mortgage payable to a bank, with interest  payable in monthly installments, bearing fixed interest at 6.03% maturing  September 1, 2018, secured by certain land, buildings and amenities,  with a carrying value of $38,786,793                                                                                                                                                              |       | 26,328,500                   |        | 26,328,500                      |       |
|                                                                                                                                                                                                                                                                                                                                                                                               |       |                         |        |                            |       |
|                                                                                                                                                                                                                                                                                                                                                                                               |       | $                            | 203,533,804 |                            | $          | 203,561,669 |   |

 

Based on theborrowing rates currently available to us for loans with similar terms andaverage maturities, the fair value of long-term debt on March 31, 2009 wasapproximately $218.7 million.

 

Interest paidfor the three months ended March 31, 2009 and 2008 was approximately $2.9million and $3.1 million, respectively.

 

Our mortgagesmay be prepaid but are generally subject to a yield-maintenance premium.  Certain mortgages and notes payable containcovenants and requirements that we maintain specified debt limits and ratiosrelated to our debt balances and property values.  We complied with all covenants andrequirements at March 31, 2009.  Weanticipate renewing or refinancing our mortgages and note payable coming duewithin the next twelve months.

 

We enteredinto an interest rate swap agreement beginning in September 2007 thateffectively converted $18.0 million of our variable-rate debt bearing interestat the LIBOR one month rate to a fixed rate basis through September 2009,when the contract expires.

 

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The fair value of the interest rate swap agreement at March 31,2009, was approximately $0.3 million and is included in Other Liabilities onour Consolidated Balance Sheet.  Duringthe three months ended March 31, 2009, we recognized a net loss ofapproximately $35,000 on the interest rate swap agreement after any netpayments received or made.

 

Mortgages payable for our tenant in common properties consist of thefollowing:

 
| ** **                                                                                                                                                                                                                                    | ** ** | **(Unaudited)**              | ** ** | ** **                      | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|---------------------------------|------------|
| ** **                                                                                                                                                                                                                                    | ** ** | **March 31, 2009** | ** ** | **December 31, 2008** | ** ** |
| Mortgage payable to a bank in monthly  installments of principal and interest, bearing fixed interest at 5.72%,  maturing on April 11, 2017, secured by certain land, buildings and  amenities, with a carrying value of $40,462,627 (1) |       | $                            | 35,143,728 |                            | $          | 35,268,090 |   |
|                                                                                                                                                                                                                                          |       |                         |       |                            |       |
| Mortgage payable to a bank in monthly  installments, bearing fixed interest at 5.99% maturing November 15,  2017, secured by certain land, buildings and amenities, with a carrying value  of $29,244,363 (2)                            |       | $                            | 22,750,000 |                            | $          | 22,750,000 |   |

 

----

(1) We areproportionately liable for this mortgage, limited to our 60% interest as atenant in common.

(2) Weare jointly and severally liable under this mortgage.

 

**Note 10 —Accounts Payable and Accrued Expenses Due to Affiliate**

 

Accountspayable and accrued expenses due to affiliate includes amounts owed to NTSDevelopment Company for reimbursement of employee costs and overhead expensesand fees for services rendered as provided for in our management agreement.

 

**Note 11 —Related Party Transactions**

 

Pursuant toour management agreement, NTS Development Company receives fees for a varietyof services performed for our benefit. NTS Development Company also receives fees under separate managementagreements for each of our properties owned as a tenant in common with anunaffiliated third party.  Propertymanagement fees are paid in an amount equal to 5% of the gross collected revenuefrom our wholly-owned properties and 3.5% of the gross collected revenue fromour properties owned as a tenant in common with an unaffiliated thirdparty.  We were the beneficiary of apreferential ownership interest, disproportionately greater than our initialcash investment in each property owned as a tenant in common with anunaffiliated third party.  Constructionsupervision fees are paid in an amount equal to 5% of the costs incurred whichrelate to capital improvements.  Theseconstruction supervision fees are capitalized as part of land, buildings andamenities.  Also pursuant to themanagement agreement, NTS Development Company receives commercial leasing feesequal to 4% of the gross rental amount for new leases and 2% of the grossrental amount for new leases in which a broker is used and for renewals orextensions.  Disposition fees are paid toNTS Development Company in an amount of 1% to 4% of the aggregate sales priceof a property pursuant to our management agreement and up to a 6% fee upondisposition on our properties owned as a tenant in common with an unaffiliatedthird party under separate management agreements.  NTS Development Company is reimbursed itsactual costs for services rendered to NTS Realty.  NTS Development Company has agreed to accepta lower management fee for the properties we own as a tenant in common with anunaffiliated third party in exchange for a larger potential disposition fee.

 

Employee costsare allocated among NTS Realty, other affiliates of our managing generalpartner and for the benefit of third parties, so that a full time employee canbe shared by multiple entities.  Eachemployee’s services, which are dedicated to a particular entity’s operations,are allocated as a percentage of each employee’s costs to that entity.  We only reimburse charges from NTSDevelopment Company for actual costs of employee services incurred for ourbenefit.

 

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We werecharged the following approximate amounts pursuant to our management agreementwith NTS Development Company for the three months ended March 31, 2009 and2008.  These charges include items, whichhave been expensed as operating expenses reimbursed to affiliate orprofessional and administrative expenses reimbursed to affiliate and items,which have been capitalized as other assets or as land, buildings andamenities.  Certain of these items areincluded in our results of discontinued operations.

** **
| ** **                                                        | ** ** | **(Unaudited)**                                                        | ** ** |
|-------------------------------------------------------------------|------------|------------------------------------------------------------------------|------------|
| ** **                                                        | ** ** | **For the Three Months Ended March 31,** | ** ** |
| ** **                                                        | ** ** | **2009**                                                               | ** ** | **2008** | ** ** |
| Property management fees                                          | ** ** | $                                                                      | 531,000    |   | $ | 590,000 |   |
|                                                              |       |                                                                   |       |   |   |
| Operating expenses reimbursement - Property                       |       | 776,000                                                                |       | 806,000 |   |
| Operating expenses reimbursement -  Multifamily Leasing           |       | 130,000                                                                |       | 114,000 |   |
| Operating expenses reimbursement -  Administrative                |       | 254,000                                                                |       | 312,000 |   |
| Operating expenses reimbursement - Other                          |       | 12,000                                                                 |       | 24,000 |   |
|                                                              |       |                                                                   |       |   |   |
| Total operating expenses reimbursed to  affiliate                 |       | 1,172,000                                                              |       | 1,256,000 |   |
|                                                              |       |                                                                   |       |   |   |
| Professional and administrative expenses  reimbursed to affiliate |       | 393,000                                                                |       | 439,000 |   |
|                                                              |       |                                                                   |       |   |   |
| Construction supervision fees                                     |       | 10,000                                                                 |       | 54,000 |   |
| Commercial leasing fees                                           |       | 2,000                                                                  |       | 5,000 |   |
|                                                              |       |                                                                   |       |   |   |
| **Total related party transactions**                              |       | $                                                                      | 2,108,000  |   | $ | 2,344,000 |   |

 

Property,multifamily leasing, administrative and other operating expenses reimbursedinclude employee costs charged to us by NTS Development Company and otheractual costs incurred by NTS Development Company on our behalf, which were reimbursedby us.

 

During thethree months ended March 31, 2009 and 2008, we were charged approximately$16,000 and $22,000, respectively, for property maintenance fees fromaffiliates of NTS Development Company.

 

NTSDevelopment Company leased 20,368 square feet of office space at a rental rateof $14.50 per square foot and 2,220 square feet of storage space at a rentalrate of $5.50 per square foot at NTS Center. We received rental payments from NTS Development Company ofapproximately $75,000 and $74,000 during each of the three months ended March 31,2009 and 2008, respectively.  The averageper square foot rental rate for similar office space in NTS Center as of March 31,2009 was $14.88 per square foot.

 

**Note 12 —Commitments and Contingencies**

 

We, as anowner of real estate, are subject to various environmental laws of federal,state and local governments.  Ourcompliance with existing laws has not had a material adverse effect on ourfinancial condition and results of operations. However, we cannot predict the impact of new or changed laws orregulations on our current properties or on properties that we may acquire inthe future.

 

***Litigation***

*** ***

We do notbelieve there is any litigation threatened against us other than routinelitigation arising out of the ordinary course of business, some of which isexpected to be covered by insurance, none of which is expected to have amaterial effect on our financial position or results of operations.

 

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**Note 13 —Segment Reporting**

 

Our reportableoperating segments include — Land, Retail, Commercial and Multifamily RealEstate Operations.  The followingunaudited financial information of the operating segments has been preparedusing a management approach, which is consistent with the basis and manner inwhich our management internally disaggregates financial information for thepurpose of assisting in making internal operating decisions.  We evaluate performance based on stand-aloneoperating segment net income or loss.

 
| ** **                                                                                                     | ** ** | **(Unaudited)**                                                | ** ** |
|----------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                                                                     | ** ** | **Three Months Ended March 31, 2009** | ** ** |
| ** **                                                                                                     | ** ** | **Retail**                                                     | ** ** | **Commercial** | ** ** | **Multifamily** | ** ** | **Partnership** | ** ** | **Total** | ** ** |
| Rental income                                                                                                  |       | $                                                              | 332,827    |   | $ | 1,318,996 |   | $ | 8,590,034 |   | $ | (9,227 | ) | $ | 10,232,630 |   |
| Tenant reimbursements                                                                                          |       | 30,257                                                         |       | 425,571 |   | - |   | - |   | 455,828 |   |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |
| **Total revenue**                                                                                              |       | 363,084                                                        |       | 1,744,567 |   | 8,590,034 |   | (9,227 | ) | 10,688,458 |   |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |
| Operating expenses and operating expenses  reimbursed to affiliate                                             |       | 43,753                                                         |       | 665,642 |   | 2,585,233 |   | - |   | 3,294,628 |   |
| Management fees                                                                                                |       | 22,127                                                         |       | 79,366 |   | 429,058 |   | - |   | 530,551 |   |
| Property taxes and insurance                                                                                   |       | 14,316                                                         |       | 234,616 |   | 1,199,361 |   | 31,940 |   | 1,480,233 |   |
| Professional and administrative expenses  and professional and administrative expenses reimbursed to affiliate |       | -                                                              |       | - |   | - |   | 680,973 |   | 680,973 |   |
| Depreciation and amortization                                                                                  |       | 71,251                                                         |       | 487,189 |   | 3,566,052 |   | - |   | 4,124,492 |   |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |
| **Total operating expenses**                                                                                   |       | 151,447                                                        |       | 1,466,813 |   | 7,779,704 |   | 712,913 |   | 10,110,877 |   |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |
| **Operating income (loss)**                                                                                    |       | 211,637                                                        |       | 277,754 |   | 810,330 |   | (722,140 | ) | 577,581 |   |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |
| Interest and other income                                                                                      |       | -                                                              |       | 413 |   | 6,986 |   | 56,588 |   | 63,987 |   |
| Interest expense, net                                                                                          |       | (108,555                                                       | )          | (467,495 | ) | (2,228,128 | ) | 50,824 |   | (2,753,354 | ) |
| Loss on disposal of assets                                                                                     |       | -                                                              |       | (10,558 | ) | (1,197 | ) | - |   | (11,755 | ) |
| Loss from investments in tenants in common                                                                     |       | -                                                              |       | - |   | (520,214 | ) | - |   | (520,214 | ) |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |
| **Income (loss) from continuing operations**                                                                   |       | 103,082                                                        |       | (199,886 | ) | (1,932,223 | ) | (614,728 | ) | (2,643,755 | ) |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |
| **Net income (loss)**                                                                                          |       | $                                                              | 103,082    |   | $ | (199,886 | ) | $ | (1,932,223 | ) | $ | (614,728 | ) | $ | (2,643,755 | ) |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |
| Land, buildings and amenities, net                                                                             |       | $                                                              | 7,271,598  |   | $ | 30,110,475 |   | $ | 237,738,946 |   | $ | - |   | $ | 275,121,019 |   |

 

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| ** **                                                                                                     | ** ** | **(Unaudited)**                                                | ** ** |
|----------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                                                                     | ** ** | **Three Months Ended March 31, 2008** | ** ** |
| ** **                                                                                                     | ** ** | **Land**                                                       | ** ** | **Retail** | ** ** | **Commercial** | ** ** | **Multifamily** | ** ** | **Partnership** | ** ** | **Total** | ** ** |
| Rental income                                                                                                  |       | $                                                              | -          |   | $ | 325,075 |   | $ | 1,728,144 |   | $ | 7,463,324 |   | $ | (30,990 | ) | $ | 9,485,553 |   |
| Tenant reimbursements                                                                                          |       | -                                                              |       | 20,099 |   | 381,922 |   | - |   | - |   | 402,021 |   |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |
| **Total revenue**                                                                                              |       | -                                                              |       | 345,174 |   | 2,110,066 |   | 7,463,324 |   | (30,990 | ) | 9,887,574 |   |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Operating expenses and  operating expenses reimbursed to affiliate                                             |       | -                                                              |       | 32,399 |   | 588,685 |   | 2,156,726 |   | - |   | 2,777,810 |   |
| Management fees                                                                                                |       | -                                                              |       | 15,303 |   | 102,047 |   | 381,711 |   | - |   | 499,061 |   |
| Property taxes and  insurance                                                                                  |       | -                                                              |       | 14,542 |   | 211,058 |   | 881,643 |   | 31,235 |   | 1,138,478 |   |
| Professional and administrative  expenses and professional and administrative expenses reimbursed to affiliate |       | -                                                              |       | - |   | - |   | - |   | 738,689 |   | 738,689 |   |
| Depreciation and  amortization                                                                                 |       | -                                                              |       | 67,677 |   | 393,282 |   | 2,836,628 |   | - |   | 3,297,587 |   |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |
| **Total operating expenses**                                                                                   |       | -                                                              |       | 129,921 |   | 1,295,072 |   | 6,256,708 |   | 769,924 |   | 8,451,625 |   |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |
| **Operating income (loss)**                                                                                    |       | -                                                              |       | 215,253 |   | 814,994 |   | 1,206,616 |   | (800,914 | ) | 1,435,949 |   |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Interest and other income                                                                                      |       | -                                                              |       | - |   | 427 |   | 4,730 |   | - |   | 5,157 |   |
| Interest expense, net                                                                                          |       | -                                                              |       | (111,466 | ) | (437,634 | ) | (1,890,059 | ) | (469,446 | ) | (2,908,605 | ) |
| Loss on disposal of assets                                                                                     |       | -                                                              |       | - |   | (36,070 | ) | (17,123 | ) | - |   | (53,193 | ) |
| Loss from investments in  tenants in common                                                                    |       | -                                                              |       | - |   | - |   | (619,019 | ) | - |   | (619,019 | ) |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |
| **Income (loss) from continuing  operations**                                                                  |       | -                                                              |       | 103,787 |   | 341,717 |   | (1,314,855 | ) | (1,270,360 | ) | (2,139,711 | ) |
| Discontinued operations,  net                                                                                  |       | 8,070                                                          |       | - |   | 566,082 |   | - |   | - |   | 574,152 |   |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |
| **Net income (loss)**                                                                                          |       | $                                                              | 8,070      |   | $ | 103,787 |   | $ | 907,799 |   | $ | (1,314,855 | ) | $ | (1,270,360 | ) | $ | (1,565,559 | ) |
|                                                                                                           |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Land, buildings and  amenities, net                                                                            |       | $                                                              | -          |   | $ | 7,364,879 |   | $ | 29,887,484 |   | $ | 209,825,938 |   | $ | - |   | $ | 247,078,301 |   |

## ** **

## **17**

## ****

## **Table of Contents**

## ** **

## **Item 2**– Management’s Discussion and Analysis of FinancialCondition and Results of Operations

## ** **

Management’s Discussion and Analysis ofFinancial Condition and Results of Operations should be read in conjunctionwith the financial statements in Item 1 and the cautionary statements below.

 

**Critical AccountingPolicies**

** **

A critical accounting policy is one thatwould materially affect our operations or financial condition, and requiresmanagement to make estimates or judgments in certain circumstances.  These judgments often result from the need tomake estimates about the effect of matters that are inherently uncertain.  Critical Accounting Policies are not to beconfused with accounting principles and methods disclosed in accordance withU.S. generally accepted accounting principles (“GAAP”).  GAAP requires information in financialstatements about accounting principles, methods used and disclosures pertainingto significant estimates.  Our CriticalAccounting Policies, as previously disclosed in our most recent annual reporton Form 10-K, which was filed on March 31, 2009, discuss judgmentsknown to management pertaining to trends, events or uncertainties known whichwere taken into consideration upon the application of those policies and thelikelihood that materially different amounts would be reported upon taking intoconsideration different conditions and assumptions and remain unchanged duringthe quarter ended March 31, 2009.

 

**Results of Operations**

** **

As of March 31, 2009, we owned wholly oras a tenant in common with an unaffiliated third party, twelve multifamilyproperties, seven office and business centers and three retail properties.  We generate substantially all of ouroperating income from property operations.

 

Net loss for the three months ended March 31,2009 and 2008 was approximately $2.6 million and $1.6 million,respectively.  During 2008, we acquiredShelby Farms Apartments (June 2008), referred to as our “2008 acquisition”. Our increase in net loss for the threemonths ended March 31, 2009 as compared to 2008 is primarily due to thenet operating results of our 2008 acquisition, a $0.7 million loss.  The remaining increase in net loss is due tothe sale of the Office Portfolio in May 2008 with discontinued operationsnet income for the three months ended March 31, 2008 of approximately $0.6million without similar net income in 2009.

 

The following tables include certain selectedsummarized operating data for the three months ended March 31, 2009 and2008.  This data should be read inconjunction with our financial statements, including the notes attached hereto.

 
| ** **                                                         | ** ** | **(Unaudited)**                                                | ** ** |
|--------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                         | ** ** | **Three Months Ended March 31, 2009** | ** ** |
| ** **                                                         | ** ** | **Retail**                                                     | ** ** | **Commercial** | ** ** | **Multifamily** | ** ** | **Partnership** | ** ** | **Total** | ** ** |
| Total revenues                                                     |       | $                                                              | 363,084    |   | $ | 1,744,567 |   | $ | 8,590,034 |   | $ | (9,227 | ) | $ | 10,688,458 |   |
| Operating expenses and  operating expenses reimbursed to affiliate |       | 43,753                                                         |       | 665,642 |   | 2,585,233 |   | - |   | 3,294,628 |   |
| Depreciation and  amortization                                     |       | 71,251                                                         |       | 487,189 |   | 3,566,052 |   | - |   | 4,124,492 |   |
| Total interest expense                                             |       | (108,555                                                       | )          | (467,495 | ) | (2,228,128 | ) | 50,824 |   | (2,753,354 | ) |
| Net income (loss)                                                  |       | 103,082                                                        |       | (199,886 | ) | (1,932,223 | ) | (614,728 | ) | (2,643,755 | ) |
|                                                                    |            |                                                                |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

 
| ** **                                                         | ** ** | **(Unaudited)**                                                | ** ** |
|--------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                         | ** ** | **Three Months Ended March 31, 2008** | ** ** |
| ** **                                                         | ** ** | **Land**                                                       | ** ** | **Retail** | ** ** | **Commercial** | ** ** | **Multifamily** | ** ** | **Partnership** | ** ** | **Total** | ** ** |
| Total revenues                                                     |       | $                                                              | -          |   | $ | 345,174 |   | $ | 2,110,066 |   | $ | 7,463,324 |   | $ | (30,990 | ) | $ | 9,887,574 |   |
| Operating expenses and  operating expenses reimbursed to affiliate |       | -                                                              |       | 32,399 |   | 588,685 |   | 2,156,726 |   | - |   | 2,777,810 |   |
| Depreciation and  amortization                                     |       | -                                                              |       | 67,677 |   | 393,282 |   | 2,836,628 |   | - |   | 3,297,587 |   |
| Total interest expense                                             |       | -                                                              |       | (111,466 | ) | (437,634 | ) | (1,890,059 | ) | (469,446 | ) | (2,908,605 | ) |
| Net income (loss)                                                  |       | 8,070                                                          |       | 103,787 |   | 907,799 |   | (1,314,855 | ) | (1,270,360 | ) | (1,565,559 | ) |
|                                                                    |            |                                                                |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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Occupancy levels at our continuing propertiesby segment as of March 31, 2009 and 2008 were as follows:

 
| ** **  | ** ** | **2009** | ** ** | **2008** | ** ** |
|-------------|------------|----------|------------|----------|------------|
| Commercial  |       | 67       | %          | 74       | %          |
| Multifamily |       | 92       | %          | 93       | %          |
| Retail      |       | 99       | %          | 98       | %          |
| Land        |       | N/A      |       | N/A      |       |

 

We believe the changes in occupancy on March 31from year to year are temporary effects of each property’s specific mix oflease maturities and are not indicative of any known trend or uncertainty.

 

The average occupancy levels at ourcontinuing properties by segment for the three months ended March 31, 2009and 2008 were as follows:

 
| ** **  | ** ** | **Three Months Ended March 31,** | ** ** |
|-------------|------------|------------------------------------------------------|------------|
| ** **  | ** ** | **2009**                                             | ** ** | **2008** | ** ** |
| Commercial  |       | 68                                                   | %          | 75 | % |
| Multifamily |       | 92                                                   | %          | 93 | % |
| Retail      |       | 99                                                   | %          | 98 | % |
| Land        |       | N/A                                                  |       | N/A |   |

 

We believe the changes in average occupancyfrom period to period are temporary effects of each property’s specific mix oflease maturities and are not indicative of any known trend or uncertainty.

 

The leasing and renewal negotiations for ourcommercial and retail properties are primarily handled by leasing agents thatare employees of NTS Development Company. All advertising for the commercial and retail properties is coordinatedby NTS Development Company’s marketing staff located in Louisville, Kentucky.

 

We have on-site leasing staff, who areemployees of NTS Development Company, at each of the multifamilyproperties.  The staff handles allon-site visits from potential tenants, coordinates local advertising with NTSDevelopment Company’s marketing staff, makes visits to local companies topromote fully furnished apartments and negotiates lease renewals with currentresidents.

 

The following discussion relating to changesin our results of operations includes only material line items within ourStatements of Operations or line items for which there was a material changebetween the three months ended March 31, 2009 and 2008.

 

***Rental Income and TenantReimbursements***

*** ***

Rental income and tenant reimbursements fromcontinuing operations for the three months ended March 31, 2009 and 2008were approximately $10.7 million and $9.9 million, respectively.  The increase of $0.8 million, or 8%, wasprimarily the result of our 2008 acquisition.

 

***Operating Expenses and OperatingExpenses Reimbursed to Affiliate***

*** ***

Operating expenses from continuing operationsfor the three months ended March 31, 2009 and 2008 were approximately $2.1million and $1.7 million, respectively. The increase of $0.4 million, or 24%, was primarily due to a $0.3million increase from our 2008 acquisition along with an overall increase of$0.1 million across our commercial and multifamily properties for repairs andmaintenance, utilities and landscaping expenses.

 

Operating expenses reimbursed to affiliatefrom continuing operations for the three months ended March 31, 2009 and2008 were approximately $1.2 million and $1.1 million, respectively.  The increase of $0.1 million, or 9%, wasprimarily due to reimbursing NTS Development Company for the employees of our2008 acquisition.

 

We do not have any employees.  Pursuant to our management agreement, NTSDevelopment Company employs the individuals who provide services necessary tooperate our properties and conduct our business.  NTS Development Company provides employeesthat may also perform services for other properties and businessenterprises.  In the situation where aparticular employee benefits multiple operations, the employee’s cost is 

 

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proportionately charged out to the entityreceiving the services.  We onlyreimburse charges from NTS Development Company for actual costs of employeeservices incurred for our benefit.  Thecost of services provided to us by NTS Development Company’s employees areclassified in our consolidated Statements of Operations as “Operating expensesreimbursed to affiliate”.  The servicesprovided by others are classified as “Operating expenses”.

 

Operating expenses reimbursed to affiliateare for services performed by employees of NTS Development Company, anaffiliate of our general partner.  Theseemployee services include property management, leasing, maintenance, securityand other services necessary to manage and operate our business.

 

Operating expenses reimbursed to affiliatefrom continuing operations consisted approximately of the following:

*** ***
| ** **          | ** ** | **(Unaudited)**                                      | ** ** |
|---------------------|------------|------------------------------------------------------|------------|
| ** **          | ** ** | **Three Months Ended March 31,** | ** ** |
| ** **          | ** ** | **2009**                                             | ** ** | **2008** | ** ** |
| Property            |       | $                                                    | 776,000    |   | $ | 681,000 |   |
| Multifamily Leasing |       | 130,000                                              |       | 114,000 |   |
| Administrative      |       | 254,000                                              |       | 246,000 |   |
| Other               |       | 12,000                                               |       | 14,000 |   |
|                |       |                                                 |       |   |   |
| **Total**           |       | $                                                    | 1,172,000  |   | $ | 1,055,000 |   |

 

***Management Fees***

*** ***

Management fees from continuing operationsfor the three months ended March 31, 2009 and 2008 were approximately $0.5million and $0.5 million, respectively. For the three months ended March 31, 2009 and 2008, there were nomaterial offsetting changes in management fees.

 

Pursuant to our management agreement, NTSDevelopment Company receives property management fees equal to 5% of the grosscollected revenue from our wholly-owned properties.  NTS Development Company receives propertymanagement fees from our properties owned as a tenant in common with anunaffiliated third party equal to 3.5% of their gross collected revenue underseparate management agreements.  We werethe beneficiary of a preferential ownership interest, disproportionatelygreater than our initial cash investment in each property owned as a tenant incommon with an unaffiliated third party. NTS Development Company has agreed to accept a lower management fee forthe properties we own as a tenant in common with an unaffiliated third party inexchange for a larger potential disposition fee.  Disposition fees of up to 6% of the grosssales price may be paid to NTS Development Company for the sale of one of ourproperties owned as a tenant in common with an unaffiliated third party.  Management fees are calculated as a percentageof cash collections and are recorded on the accrual basis.  As a result, the fluctuations in revenuebetween years will differ from the fluctuations of management fee expense.

 

***Property Taxes and Insurance***

*** ***

Property taxes and insurance from continuingoperations for the three months ended March 31, 2009 and 2008 wereapproximately $1.5 million and $1.1 million, respectively.  The increase of $0.4 million, or 36%, wasprimarily due to a $0.3 million increase in property taxes and insurance fromour 2008 acquisition along with increased property tax expense of $0.1 millionat Castle Creek Apartments, Lake Clearwater Apartments and the Lakes Apartmentsas a result of increased property tax assessments.  We are continuing to appeal the property taxassessments on these properties located in Marion County, Indiana.  There can be no assurance these appeals willbe successful.

 

***Professional andAdministrative Expenses and Professional and Administrative Expenses Reimbursedto Affiliate***

*** ***

Professional and administrative expenses fromcontinuing operations for the three months ended March 31, 2009 and 2008were approximately $0.3 million and $0.3 million, respectively.  For the three months ended March 31,2009 and 2008, there were no material offsetting changes in professional andadministrative expenses.

 

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Professional and administrative expensesreimbursed to affiliate from continuing operations for the three months ended March 31,2009 and 2008 were $0.4 million and $0.4 million, respectively.  For the three months ended March 31,2009 and 2008, there were no material offsetting changes in professional andadministrative expenses reimbursed to affiliate.

 

We do not have any employees.  Pursuant to our management agreement, NTSDevelopment Company employs the individuals who provide services necessary tooperate our properties and conduct our business.  NTS Development Company provides employeesthat may also perform services for other properties and businessenterprises.  In the situation where aparticular employee benefits multiple operations, the employee’s cost isproportionately charged out to the entity receiving the services.  We only reimburse charges from NTSDevelopment Company for actual costs of employee services incurred for ourbenefit.  The cost of services providedto us by NTS Development Company’s employees are classified in our consolidatedStatements of Operations as “Professional and administrative expensesreimbursed to affiliate”.  The servicesprovided by others are classified as “Professional and administrative”.

 

Professional and administrative expensesreimbursed to affiliate are for the services performed by employees of NTSDevelopment Company, an affiliate of our general partner.  These employee services include legal,financial and other services necessary to manage and operate our business.

 

Professional and administrativeexpenses reimbursed to affiliate from continuing operations consistedapproximately of the following:

 
| ** **         | ** ** | **(Unaudited)**                                      | ** ** |
|--------------------|------------|------------------------------------------------------|------------|
| ** **         | ** ** | **Three Months Ended March 31,** | ** ** |
| ** **         | ** ** | **2009**                                             | ** ** | **2008** | ** ** |
| Finance            |       | $                                                    | 89,000     |   | $ | 103,000 |   |
| Accounting         |       | 187,000                                              |       | 216,000 |   |
| Investor Relations |       | 79,000                                               |       | 78,000 |   |
| Human Resources    |       | 4,000                                                |       | 5,000 |   |
| Overhead           |       | 34,000                                               |       | 37,000 |   |
|               |       |                                                 |       |   |   |
| **Total**          |       | $                                                    | 393,000    |   | 439,000 |   |
|                    |            |                                                      |            |  |  |  |  |

*** ***

***Depreciation andAmortization***

*** ***

Depreciation and amortization expense fromcontinuing operations for the three months ended March 31, 2009 and 2008was approximately $4.1 million and $3.3 million, respectively.  The increase of $0.8 million, or 24%, wasprimarily due to our 2008 acquisition.

 

***Interest Expense***

*** ***

Interest expense from continuing operationsfor the three months ended March 31, 2009 and 2008 was approximately $2.8million and $2.9 million, respectively. The decrease of $0.1 million, or 3%, was primarily due to the May 2008payoff of our mortgage payable to a bank of $14.3 million, which relates to thesale of the Office Portfolio.

 

***Loss on Disposal of Assets***

*** ***

The loss on disposal of assets fromcontinuing operations for the three months ended March 31, 2009 and 2008can be attributed to assets that were not fully depreciated at the time ofreplacement, spread primarily amongst the commercial and multifamilyproperties.  The 2009 loss on disposal ofassets was due to heating and air conditioning unit replacement while the 2008loss on disposal of assets included heating and air conditioning unitreplacement, tenant finish renovations and signage.

 

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***Loss From Investments inTenants in Common***

*** ***

Loss from investments in tenants in commonfor the three months ended March 31, 2009 and 2008 includes the netoperating loss attributable to our investments in tenants in common with anunaffiliated third party.  The propertiesare The Overlook at St. Thomas Apartments and Creek’s Edge at Stony PointApartments.

 

***Discontinued Operations***

*** ***

Discontinued operations, net for the threemonths ended March 31, 2008 was approximately $0.6 million.  Discontinued operations for the three monthsended March 31, 2008 includes the net operating results for the propertiespreviously sold as listed below.

 
| **Property**                                  | ** ** | **Location**    | ** ** | **Date of Sale** | ** ** |
|-----------------------------------------------|------------|-----------------|------------|----------------------------|------------|
| Atrium Center                                 |       | Louisville,  KY |       | May 2008              |       |
| Blankenbaker Business  Center I               |       | Louisville,  KY |       | May 2008              |       |
| Blankenbaker Business  Center II              |       | Louisville,  KY |       | May 2008              |       |
| Anthem Office Center                          |       | Louisville,  KY |       | May 2008              |       |
| Plainview Center                              |       | Louisville,  KY |       | May 2008              |       |
| Plainview Point Office  Center Phase I and II |       | Louisville,  KY |       | May 2008              |       |
| Plainview Point Office  Center Phase III      |       | Louisville,  KY |       | May 2008              |       |
| ITT Parking Lot                               |       | Louisville,  KY |       | May 2008              |       |

 

**Liquidity and CapitalResources**

** **

Our most liquid asset is our cash andequivalents, which consist of cash and short-term investments, but do notinclude any restricted cash.  Operatingincome generated by the properties will be the primary source from which wegenerate cash.  Other sources of cashinclude the proceeds from mortgage loans and notes payable.  Our main uses of cash will relate to capitalexpenditures, required payments of mortgages and notes payable, distributionsand property taxes.

 

The following table summarizes ourapproximate sources/uses of cash flow for the three months ended March 31,2009 and 2008:

 
| ** **                                | ** ** | **(Unaudited)**                                      | ** ** |
|-------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                | ** ** | **Three Months Ended March 31,** | ** ** |
| ** **                                | ** ** | **2009**                                             | ** ** | **2008** | ** ** |
| Operating activities                      | ** ** | **$**                                                | 1,187,000  |   | $ | 2,812,000 | ** ** |
| Investing activities                      |       | (302,000                                             | )          | (1,415,000 | ) |
| Financing activities                      |       | (597,000                                             | )          | (634,000 | ) |
|                                      |       |                                                 |       |   |   |
| **Net increase in cash and  equivalents** | ** ** | $                                                    | 288,000    |   | 763,000 |   |
|                                           |            |                                                      |            |  |  |  |  |

 

***Cash Flow from OperatingActivities***

*** ***

Net cash provided by operating activitiesdecreased to approximately $1.2 million from $2.8 million for the three monthsended March 31, 2009 and 2008, respectively.  The decrease was primarily due to a $0.4million decrease in operating cash from discontinued operations and a $0.7million decrease in cash used to satisfy accounts payable for the three monthsended March 31, 2009 as compared to March 31, 2008.

 

***Cash Flow from InvestingActivities***

*** ***

Net cash used in investing activitiesdecreased to approximately $0.3 million from $1.4 million for the three monthsended March 31, 2009 and 2008, respectively.  The decrease was due to fewer additions toland, buildings and amenities than in the comparable prior period.

 

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***Cash Flow from FinancingActivities***

*** ***

Net cash used in financing activities wasapproximately $0.6 million and $0.6 million for the three months ended March 31,2009 and 2008, respectively.  Our cashflow from financing activities for the three months ended March 31, 2009included $0.8 million in principal payments on our mortgages payable and $0.6million in cash distributions offset by $0.8 million in proceeds from ourrevolving note payable.

 

***Future Liquidity***

*** ***

Our future liquidity depends significantly onour properties’ occupancy remaining at a level which allows us to make debtpayments and have adequate working capital, currently and in the future.  If occupancy were to fall below that leveland remain at or below that level for a significant period of time, our abilityto make payments due under our debt agreements and to continue paying dailyoperational costs would be greatly impaired. In the next twelve months, we intend to operate the properties in asimilar manner to their operation in recent years.  Cash reserves, which consist of unrestrictedcash as shown on our balance sheet, were approximately $0.3 million on March 31,2009.

 

On March 17, 2009, we announced that theboard of directors of our managing general partner approved a quarterlydistribution of $0.05 per unit on our limited partnership units.  The distribution was paid on April 17,2009, to limited partners of record at the close of business on March 31,2009.

 

Pursuant to leasing agreements signed by March 31,2009, we are obligated to incur expenditures of approximately $1.0 millionfunded by borrowings on our debt during the next twelve months primarily forrenovations and tenant origination costs necessary to continue leasing ourproperties.  These costs could increasematerially if we are successful in leasing space in Sears Office Building.  This discussion of future liquidity detailsour material commitments.  We intend torenew our note payable and mortgage payable coming due in the next twelvemonths with the existing lenders.

 

Our availability on the revolving notepayable was approximately $7.7 million as of March 31, 2009.

 

***Property Transactions***

*** ***

During the three months ended March 31,2009, we made no property acquisitions or dispositions.

 

On April 10, 2009, we entered into anagreement to purchase two multifamily properties located in Orlando, Floridaknown as Sabal Park Apartments (“Sabal Park”) and Golf Brook Apartments (“GolfBrook”).  Subject to the terms andconditions of the agreement, we agreed to an aggregate purchase price of $32.5million to acquire Sabal Park and Golf Brook. Sabal Park is a 162-unit luxury apartment community, while Golf Brook isa 195-unit luxury apartment community, both offering amenities such as afitness center, resort-style pool and custom home features.  We may purchase these properties with a jointventure partner or as a tenant in common with an unaffiliated third party.

 

We may engage in transactions structured as “likekind exchanges” of property to obtain favorable tax treatment under Section 1031of the Internal Revenue Code.  If we areable to structure an exchange of properties as a “like kind exchange,” then anygain we realize from the exchange would not be recognized for federal incometax purposes.  The test for determiningwhether exchanged properties are of “like kind” is whether the properties areof the same nature or character.

 

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**Website Information**

** **

Information concerning NTS Realty HoldingsLimited Partnership is available through the NTS Development Company website(www.ntsdevelopment.com).  Our annualreports on Form 10-K, quarterly reports on Form 10-Q, current reportson Form 8-K and amendments to those reports filed or furnished pursuant toSection 13(a) of the Securities Exchange Act are available and may beaccessed free of charge through the “Investor Services” section of our websiteas soon as reasonably practicable after we electronically file this materialwith, or furnish it to, the SEC.  Ourwebsite and the information contained therein or connected thereto are not incorporatedinto this quarterly report on Form 10-Q.

 

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## ** **

## **Item 3 – Quantitative and Qualitative Disclosures AboutMarket Risk**

## ** **

Our primary market risk exposure, with regardto financial instruments is expected to be our exposure to changes in interestrates.  We refinanced substantially allof our debt acquired at the time of our merger with instruments, which bearinterest at a fixed rate, with the exception of approximately $31.1 million atvariable rates.  We anticipate that ahypothetical 100 basis point increase in interest rates would increase interestexpense on our variable rate debt by approximately $0.3 million annually.

 

We entered into an interest rate swapagreement beginning in September 2007 that effectively converted $18.0million of our variable rate debt bearing interest at the LIBOR one month rateto a fixed rate basis through September 2009, when the contract expires.

 

The fair value of the interest rate swapagreement at March 31, 2009, was approximately $0.3 million and isincluded in Other Liabilities on our Consolidated Balance Sheet.  During the three months ended March 31,2009, we recognized a net loss of approximately $35,000 on the interest rateswap agreement after any net payments received or made.

 

**ContractualObligations and Commercial Commitments**

** **

The following table represents ourobligations and commitments to make future payments as of March 31, 2009under contracts, such as debt and lease agreements including principal andinterest, and under contingent commitments, such as debt guarantees.

 
| ** **                              | ** ** | **Payment Due by Period** | ** **  |
|-----------------------------------------|------------|------------------------------------------|-------------|
| ** **                              | ** ** | **Total**                                | ** **  | **Within  One Year** | ** ** | **One - Three   Years** | ** ** | **Three - Five  Years** | ** ** | **After Five   Years** | ** ** |
| **Contractual Obligations**        | ** ** | ** **                               | ** **  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Mortgages and notes  payable            |       | $                                        | 262,957,670 |   | $ | 44,160,784 |   | $ | 27,688,141 |   | $ | 25,918,379 |   | $ | 165,190,366 |   |
| Capital lease obligations               |       | -                                        |        | - |   | - |   | - |   | - |   |
| Operating leases (1)                    |       | -                                        |        | - |   | - |   | - |   | - |   |
| Other long-term obligations  (2)        |       | -                                        |        | - |   | - |   | - |   | - |   |
|                                    |       |                                     |        |   |   |   |   |   |   |   |   |
| **Total contractual cash  obligations** |       | $                                        | 262,957,670 |   | $ | 44,160,784 |   | $ | 27,688,141 |   | $ | 25,918,379 |   | $ | 165,190,366 |   |

 

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| (1) |   | We are party to numerous small operating leases for office equipment  such as copiers, postage machines and fax machines, which represent an  insignificant obligation.                     |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | We are party to several annual maintenance agreements with vendors for  such items as outdoor maintenance, pool service and security systems, which  represent an insignificant obligation. |

 

 

## **Item 4 – Controls and Procedures**

## ** **

Our managing general partner has establisheddisclosure controls and procedures to ensure that our material information ismade known to the officers of our managing general partner who certify ourfinancial reports, to our management and to the board of directors of ourmanaging general partner.

 

Our managing general partner’s ChiefExecutive Officer and Chief Financial Officer have evaluated the effectivenessof our disclosure controls and procedures as of March 31, 2009.  Based on that evaluation, the Chief ExecutiveOfficer and Chief Financial Officer concluded that our disclosure controls andprocedures were effective as of March 31, 2009.  There were no changes in our internal controlover financial reporting during the quarter ended March 31, 2009 thatmaterially affected or are reasonably likely to materially affect the internalcontrol over financial reporting.

 

## **Item 4T – Controls and Procedures**

## ** **

There were no material changes in ourinternal control over financial reporting during the quarter ended March 31,2009.

 

25

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# **Table of Contents**

# ** **

# **PART II– OTHER INFORMATION**

# ** **

## **Item 1 – LegalProceedings**

## ** **

None.

 

## **Item 1A – RiskFactors**

## ** **

There have not been material changes to ourRisk Factors as disclosed in our most recent annual report on Form 10-K asfiled with the Securities and Exchange Commission on March 31, 2009.

 

## **Item 2 – UnregisteredSales of Equity Securities and Use of Proceeds**

## ** **

On May 16, 2008, we announced that anentity controlled by our Chairman, Mr. J.D. Nichols, commenced apre-arranged trading plan to purchase limited partnership units of NTS RealtyHoldings Limited Partnership (the “Company”) pursuant to Rule 10b5-1 underthe Securities Exchange Act of 1934, as amended (the “Act”).  The plan authorizes its administrator, WellsFargo Investments, LLC, to purchase up to $1.2 million of the Company’s limitedpartnership units from time to time through no later than April 2010.  Under the terms of the plan, Mr. Nicholshas no discretion or control over the timing, effectuation or the amount ofeach purchase.

 

On December 1, 2008, we announced thattwo entities created by Mr. Nichols commenced pre-arranged trading plansto purchase limited partnership units of the Company pursuant to Rule 10b5-1under the Act.  Each of the plansauthorize its administrator, Wells Fargo Investments, LLC, to purchase up toapproximately $0.1 million of the Company’s limited partnership units from timeto time through no later than November 2009.  Under the terms of the plans, Mr. Nicholshas no discretion or control over the timing, effectuation or the amount ofeach purchase.

 

On December 15, 2008, we announced thatan entity controlled by Mr. Nichols commenced a pre-arranged trading planto purchase limited partnership units of the Company pursuant to Rule 10b5-1under the Act.  The plan authorizes itsadministrator, Wells Fargo Investments, LLC, to purchase up to approximately$0.4 million of the Company’s limited partnership units from time to timethrough no later than November 2009. Under the terms of the plan, Mr. Nichols has no discretion orcontrol over the timing, effectuation or the amount of each purchase.

 

During the three months ended March 31,2009, 17,500 units were purchased by the entities created or controlled by Mr. Nicholspursuant to the trading plans announced May 16, 2008, December 1,2008 and December 15, 2008, respectively. The table below summarizes activity pursuant to these plans for thequarterly period ended March 31, 2009.

 
| **Period**         | ** ** | **Total Number of  Units Purchased** | ** ** | **Average Price Paid  Per Unit** | ** ** | **Total Number of  Units Purchased as  Part of Publicly  Announced Plans or  Programs** | ** ** | **Maximum Number  (or Approximate  Dollar Value) of Units  That May Yet Be  Purchased Under the  Plans or Programs** | ** ** |
|--------------------|------------|-----------------------------------------------------|------------|-------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| January 2009  |       | 4,400                                               |       | $                                               | 3.67       |                                                                                                                            | 276,491    | (2)                                                                                                                                                                              |       | (1) |
|               |       |                                                |       |                                            |       |                                                                                                                            |       |                                                                                                                                                                             |       |
| February 2009 |       | 4,000                                               |       | $                                               | 3.62       |                                                                                                                            | 280,491    | (2)                                                                                                                                                                              |       | (1) |
|               |       |                                                |       |                                            |       |                                                                                                                            |       |                                                                                                                                                                             |       |
| March 2009    |       | 9,100                                               |       | $                                               | 3.76       |                                                                                                                            | 289,591    | (2)                                                                                                                                                                              |       | (1) |
|               |       |                                                |       |                                            |       |                                                                                                                            |       |                                                                                                                                                                             |       |
| Total              |       | 17,500                                              |       | $                                               | 3.68       |                                                                                                                            | 289,591    | (2)                                                                                                                                                                              |       | (1) |

 

----

| (1) |   | A description of the maximum amount that may be used to purchase our  units under the trading plans is included in the narrative preceding this  table.                                                                                                           |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Represents the total number of our limited partnership units that have  been purchased to the trading plans by entities created or controlled by  Mr. Nichols, pursuant to the current or any previous publicly announced  plan or program by trading plans. |

 

26

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## **Table of Contents**

## ** **

## **Item 3 – DefaultsUpon Senior Securities**

## ** **

None.

 

## **Item 4 – Submissionof Matters to a Vote of Security Holders**

## ** **

None.

 

## **Item 5 – OtherInformation**

## ** **

None.

 

27

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## **Table of Contents**

## ** **

## **Item 6 – Exhibits**

## ** **

| **Exhibit No.** | ** ** | ** **                                                                                                                                                                                                                                                                                 | ** ** | ** ** |
|----------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|
| 2.01                 |       | Agreement and Plan of Merger by and among NTS Realty Holdings Limited  Partnership, NTS-Properties III, NTS-Properties IV, NTS-Properties V, a  Maryland limited partnership, NTS-Properties VI, a Maryland limited  partnership and NTS-Properties VII, Ltd., dated February 3, 2004 |       | (3)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 2.02                 |       | Contribution Agreement by and between NTS Realty Holdings Limited  Partnership and ORIG, LLC,dated February 3, 2004                                                                                                                                                                   |       | (3)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 3.01                 |       | Certificate of Limited Partnership of NTS Realty Holdings Limited  Partnership                                                                                                                                                                                                             |       | (1)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 3.02                 |       | Amended and Restated Agreement of Limited Partnership of NTS Realty  Holdings Limited Partnership,dated as of  December 29, 2005                                                                                                                                                      |       | (7)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 3.03                 |       | Certificate of Incorporation of NTS Realty Capital, Inc.                                                                                                                                                                                                                              |       | (8)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 3.04                 |       | By-Laws of NTS Realty Capital, Inc.                                                                                                                                                                                                                                                   |       | (2)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.01                |       | Amended and Restated Management Agreement between NTS Realty Holdings  Limited Partnership andNTS Development Company,  dated as of December 29, 2005                                                                                                                                 |       | (6)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.02                |       | Form of Lease Agreement between NTS Realty Holdings Limited  Partnership and SHPS, Inc.                                                                                                                                                                                          |       | (4)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.03                |       | Purchase and Sale Agreement between NTS  Realty Holdings Limited Partnership and Investors Capital Mortgage Group, Inc., dated September 30,  2005 (Golf Brook Apartments)                                                                                                       |       | (5)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.04                |       | Purchase and Sale Agreement between NTS  Realty Holdings Limited Partnership and Investors Capital Mortgage Group, Inc., dated September 30,  2005 (Sabal Park Apartments)                                                                                                       |       | (5)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.05                |       | Agreement for Purchase and Sale between Schaedle Worthington Hyde Properties, L.P.  and NTS Realty Holdings Limited Partnership, dated November 1, 2005 (The Grove at Richland and The Grove at  Whitworth)                                                                           |       | (5)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.06                |       | Agreement for Purchase and Sale between Schaedle Worthington Hyde Properties, L.P.  and NTS Realty Holdings Limited Partnership, dated November 1, 2005 (The Grove at Swift Creek)                                                                                                    |       | (5)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.07                |       | Purchase and Sale Agreement between AMLI  at Castle Creek, L.P. and AMLI Residential Properties, L.P. andNTS Realty Holdings Limited  Partnership, dated February 7,  2006 (Castle Creek and Lake Clearwater)                                                                         |       | (5)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.08                |       | Unconditional and Continuing Guaranty by NTS Realty Holdings Limited  Partnership in favor ofNational City Bank, dated  March 23, 2006                                                                                                                                                |       | (5)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.09                |       | Amended and Restated Master Loan Agreements between NTS Realty Holding  Limited Partnership and The Northwestern Mutual Life Insurance Company and  between NTS Realty Holdings Limited Partnership and National City Bank, dated  October 4, 2006                                    |       | (9)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.10                |       | Purchase and Sale Agreement between NTS  Realty Holdings Limited Partnership and Meridian Realty Investments, LLC,  dated November 10, 2006 (Springs Medical Office Center)                                                                                                           |       | (10)       |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.11                |       | Purchase and Sale Agreement between NTS  Realty Holdings Limited Partnership and Meridian Realty Investments, LLC,  dated November 10, 2006 (Springs Office Center)                                                                                                                   |       | (10)       |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.12                |       | Purchase and Sale Agreement between NTS  Realty Holdings Limited Partnership together with Overlook Associates, LLC  and The Northwestern Mutual Life Insurance Company, dated December 8,  2006 (The Overlook at St. Thomas)                                                         |       | (11)       |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.13                |       | Purchase and Sale Agreement between NTS Realty Holdings Limited  Partnership together with Creek’s Edge Investors, LLC and CG Stony Point,  LLC, dated June 20, 2007 (Creek’s Edge at Stony Point)                                                                          |       | (12)  |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.14                |       | Purchase and Sale Agreement between NTS Realty Holdings Limited  Partnership and Ascent Properties, LLC, dated August 1, 2007 (The Office  Portfolio)                                                                                                                                 |       | (13)       |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 10.15                |       | Purchase and Sale Agreement between NTS Realty Holdings Limited  Partnership and Colonial Realty Limited Partnership and Colonial Properties  Services, Inc., dated June 11, 2008 (Shelby Farms)                                                                                 |       | (14)       |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 14.01                |       | Code of Conduct and Ethics of NTS Realty Holdings Limited Partnership,  adopted as of December 28, 2004                                                                                                                                                                               |       | (4)        |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 31.1                 |       | Certification of Chief Executive Officer Pursuant to  Rule 13a-14(a) and Rule 15d-14(a) of the SecuritiesExchange Act,  as amended                                                                                                                                     |       | (15)       |
|                 |       |                                                                                                                                                                                                                                                                                       |       |       |
| 31.2                 |       | Certification of Chief Financial Officer Pursuant to  Rule 13a-14(a) and Rule 15d-14(a) of the SecuritiesExchange Act,  as amended                                                                                                                                     |       | (15)       |

 

28

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Tableof Contents

 
| 32.1   |   | Certification of Chief Executive Officer Pursuant to U.S.C. 1350, as  adopted pursuant to Section 906 of theSarbanes-Oxley  Act of 2002 |   | (15)   |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|   |   |                                                                                                                                         |   |   |
| 32.2   |   | Certification of Chief Financial Officer Pursuant to U.S.C. 1350, as  adopted pursuant to Section 906 of theSarbanes-Oxley  Act of 2002 |   | (15)   |

 
| **Exhibit No.** | ** ** | ** **                                                                                                                                                         | ** ** | ** ** |
|----------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|
| 99.01                |       | Registration Statement on Form S-4/A (Amendment No. 5), as  filed by the Registrant with the Securities andExchange  Commission on October 27, 2004 |       | (3)        |

 

----

| (1)        |   | Incorporated by reference to the Registrant’s Registration Statement  on Form S-4,as filed with the  Securities and Exchange Commission on February 4, 2004                                   |
|------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)        |   | Incorporated by reference to the Registrant’s Registration Statement  on Form S-4/A (Amendment No. 1),as filed with  the Securities and Exchange Commission on June 18, 2004             |
| (3)        |   | Incorporated by reference to the Registrant’s Registration Statement  on Form S-4/A (Amendment No. 5),as filed with  the Securities and Exchange Commission on October 27, 2004          |
| (4)        |   | Incorporated by reference to the Registrant’s Annual Report on  Form 10-K for the year ended December 31, 2004, as filed with the  Securities and Exchange Commission on March 31, 2005  |
| (5)        |   | Incorporated by reference to the Registrant’s Annual Report on  Form 10-K for the year ended December 31, 2005, as filed with the  Securities and Exchange Commission on April 3, 2006   |
| (6)        |   | Incorporated by reference to the Registrant’s Current Report on  Form 8-K, as filed with the Securities and Exchange Commission on  April 17, 2006                                            |
| (7)        |   | Incorporated by reference to the Registrant’s Information Statement on  Form DEF 14C, as filed with the Securities and Exchange Commission on  May 9, 2006                                    |
| (8)        |   | Incorporated by reference to the Registrant’s Quarterly Report on  Form 10-Q for the quarter ended March 31, 2006, as filed with the  Securities and Exchange Commission on May 15, 2006 |
| (9)        |   | Incorporated by reference to the Registrant’s Current Report on  Form 8-K/A, as filed with the Securities and Exchange Commission on  October 23, 2006                                        |
| (10)       |   | Incorporated by reference to the Registrant’s Current Report on  Form 8-K, as filed with the Securities and Exchange Commission on  February 14, 2007                                         |
| (11)       |   | Incorporated by reference to the Registrant’s Current Report on  Form 8-K, as filed with the Securities and Exchange Commission on  March 16, 2007                                            |
| (12)  |   | Incorporated by reference to the Registrant’s Current Report on  Form 8-K, as filed with the Securities and Exchange Commission on  August 17, 2007                                      |
| (13)       |   | Incorporated by reference to the Registrant’s Current Report on  Form 8-K, as filed with the Securities and Exchange Commission on  May 1, 2008                                               |
| (14)       |   | Incorporated by reference to the Registrant’s Current Report on  Form 8-K, as filed with the Securities and Exchange Commission on  June 27, 2008                                             |
| (15)       |   | Filed herewith                                                                                                                                                                                               |

 

29

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## **Table of Contents**

## ** **

## **SIGNATURES**

## ** **

Pursuant to the requirements of theSecurities Exchange Act of 1934, the registrant has duly caused this report tobe 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 8, 2009 |
|       |                                        |
|       | * *                                    | By: | */s/ Gregory A. Wells* |
|       |                                        |   | Gregory A. Wells |
|       |                                        |   | Its: Chief Financial Officer |
|       |                                        |   | Date: May 8, 2009 |

 

30

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