UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-K

(Mark One)

         X       ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

                 For the fiscal year ended    December 31, 1996

                                           OR

        _____   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                 For the transition period from  ________  to  ________

                         Commission file number 0-11655

                                NTS-PROPERTIES IV
             (Exact name of registrant as specified in its charter)

             Kentucky                                     61-1026356
  (State or other jurisdiction of                     (I.R.S. Employer
  incorporation or organization)                     Identification No.)


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

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


Securities registered pursuant to Section 12(b) of the Act:

                                      None

Securities registered pursuant to Section 12(g) of the Act:

                          Limited Partnership Interests
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
                                                    YES  X         NO_____

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Exhibit Index: See page 63
Total Pages: 68


<PAGE>



                                TABLE OF CONTENTS



                                                                         Pages

                                PART I

Items 1 and 2    Business and Properties                                  3-24
Item 3           Legal Proceedings                                          24
Item 4           Submission of Matters to a Vote of
                   Security Holders                                         24


                                PART II


Item 5           Market for the Registrant's Limited Partnership
                   Interests and Related Partner Matters                    25
Item 6           Selected Financial Data                                    26
Item 7           Management's Discussion and Analysis of
                   Financial Condition and Results of Operations         27-41
Item 8           Financial Statements and Supplementary Data             42-59
Item 9           Changes in and Disagreements with Accountants
                   on Accounting and Financial Disclosure                   60


                               PART III


Item 10          Directors and Executive Officers of the
                   Registrant                                            60-61
Item 11          Management Remuneration and Transactions                   61
Item 12          Security Ownership of Certain Beneficial
                   Owners and Management                                    61
Item 13          Certain Relationships and Related Transactions          61-62


                                PART IV


Item 14          Exhibits, Financial Statement Schedules
                   and Reports on Form 8-K                               63-67


Signatures                                                                  68



                                      - 2 -

<PAGE>



                                     PART I

Items 1. and 2.  Business and Properties

General
-------

Some of the statements  included in Items 1 and 2, Business and Properties,  may
be considered to be "forward looking statements" since such statements relate to
matters  which  have  not  yet  occured.  For  example,  phrases  such  as  "the
Partnership  anticipates",  "believes" or "expects" indicate that it is possible
that the event  anticipated,  believed  or expected  may not occur.  Should such
event not occur,  then the result which the  Partnership  expected  also may not
occur or occur in a different manner, which may be more or less favorable to the
Partnership.  The  Partnership  does not  undertake  any  obligation to publicly
release the result of any revisions to these forward looking statements that may
be made to reflect any future events or circumstances.

NTS-Properties IV., Ltd., a Kentucky Limited Partnership,  (the "Partnership" or
"NTS-Properties  IV") is a limited  partnership  organized under the laws of the
Commonwealth of Kentucky on May 13, 1983. The general partner is  NTS-Properties
Associates  IV, a Kentucky  limited  partnership.  As of December 31, 1996,  the
Partnership owned the following properties:

       -   Commonwealth   Business  Center  Phase  I,  a  business  center  with
           approximately  57,000  net  rentable  ground  floor  square  feet and
           approximately   24,000  net   rentable   mezzanine   square  feet  in
           Louisville, Kentucky, constructed by the Partnership.

       -   Plainview  Point Office Center Phases I and II, an office center with
           approximately   56,000  net  rentable   square  feet  in  Louisville,
           Kentucky, acquired complete by the Partnership.

       -   The Willows of Plainview Phase I, a 118-unit luxury apartment complex
           in Louisville, Kentucky, constructed by the Partnership.

       -   A joint  venture  interest  in The Willows of  Plainview  Phase II, a
           144-unit   luxury   apartment   complex  in   Louisville,   Kentucky,
           constructed  by the joint venture  between the  Partnership  and NTS-
           Properties  V, a Maryland  Limited  Partnership,  an affiliate of the
           general  partner  of  the  Partnership,   ("NTS-Properties  V").  The
           Partnership's  percentage  interest  in the joint  venture was 10% at
           December 31, 1996.

       -   A joint venture interest in Golf Brook Apartments,  a 195-unit luxury
           apartment  complex  in  Orlando,  Florida,  constructed  by the joint
           venture  between the Partnership  and  NTS-Properties  VI, a Maryland
           Limited  Partnership,  an  affiliate  of the  general  partner of the
           Partnership,  ("NTS-Properties  VI").  The  Partnership's  percentage
           interest in the joint venture was 4% at December 31, 1996.

       -   A joint venture  interest in Plainview  Point III Office  Center,  an
           office center with  approximately  62,000 net rentable square feet in
           Louisville,  Kentucky,  constructed by the joint venture  between the
           Partnership  and  NTS-Properties  VI.  The  Partnership's  percentage
           interest in the joint venture was 5% at December 31, 1996.

       -   A joint  venture  interest  in  Blankenbaker  Business  Center  1A, a
           business center with  approximately  50,000 net rentable ground floor
           square feet and  approximately  50,000 net rentable  mezzanine square
           feet located in Louisville,  Kentucky,  acquired  complete by a joint
           venture  between  NTS-Properties  Plus Ltd. and  NTS-Properties  VII,
           Ltd., affiliates of the general partner of the Partnership. The Joint
           Venture Agreement was amended to admit the Partnership during

                                      - 3 -

<PAGE>



Items 1. and 2.  Business and Properties - Continued

General - Continued
-------------------

                  1994.  The  Partnership's  percentage  interest  in the  joint
                  venture was 30% at December 31, 1996.

           -      A joint venture interest in the  Lakeshore/University II Joint
                  Venture ("L/U II Joint Venture"). The L/U II Joint Venture was
                  formed on  January  23,  1995 among the  Partnership  and NTS-
                  Properties   V,   NTS-Properties   Plus  Ltd.   and   NTS/Fort
                  Lauderdale,  Ltd.,  affiliates  of the general  partner of the
                  Partnership.  The  Partnership's  percentage  interest  in the
                  joint venture was 18% at December 31, 1996.

           A  description  of the  properties  owned by the L/U II Joint Venture
           appears below:

           -   Lakeshore  Business  Center  Phase  I - a  business  center  with
               approximately  103,000 net  rentable  square feet located in Fort
               Lauderdale, Florida, acquired complete by the joint venture.

           -   Lakeshore  Business  Center  Phase II - a  business  center  with
               approximately  97,000 net  rentable  square feet  located in Fort
               Lauderdale, Florida, acquired complete by the joint venture.

           -   University  Business  Center  Phase II - a business  center  with
               approximately   78,000  net  rentable  first  floor  (office  and
               service) and second floor  office  square feet and  approximately
               10,000 net  rentable  mezzanine  square feet  located in Orlando,
               Florida, acquired complete by the joint venture.

           -   Outparcel Building Sites - approximately 6.2 acres of undeveloped
               land adjacent to the Lakeshore Business Center development, which
               is zoned for commercial development.

The Partnership or the joint venture in which the Partnership is a partner has a
fee title interest in the above properties.  In the opinion of the Partnership's
management, the properties are adequately covered by insurance.

Commonwealth  Business Center Phase I is encumbered by a mortgage  payable to an
insurance company.  The outstanding balance at December 31, 1996 was $2,467,606.
The mortgage  bears interest at a fixed rate of 8.8% and is due October 1, 2004.
Monthly principal payments are based upon a 10-year  amortization  schedule.  At
maturity,  the  mortgage  will have been  repaid  based on the  current  rate of
amortization.

Plainview  Point  Office  Center  Phases  I and  II is  not  encumbered  by  any
outstanding mortgages at December 31, 1996.

The Willows of Plainview  Phase I is encumbered by permanent  mortgages with two
insurance companies. Both loans are secured by a first mortgage on the property.
The  outstanding  balance of the  mortgages at December 31, 1996 was  $3,928,950
($2,012,389 and $1,916,561). Both mortgages currently bear a fixed interest rate
of 7% and are due December 5, 2003.  Current monthly principal  payments on both
notes are based upon a 27-year amortization schedule. The outstanding balance at
maturity  based  on  the  current  rate  of  amortization  would  be  $3,367,108
($1,724,617 and $1,642,491).

The  Willows of  Plainview  Phase II, an  apartment  joint  venture  between the
Partnership and NTS-Properties V, is encumbered by permanent  mortgages with two
insurance  companies.  The outstanding balances of the mortgages at December 31,
1996 was $5,143,945 ($3,220,975 and $1,922,970). The mortgages

                                      - 4 -

<PAGE>



Items 1. and 2.  Business and Properties - Continued

General - Continued
-------------------

are  recorded  as  a  liability  of  the  Joint   Venture.   The   Partnership's
proportionate  interest  in the  mortgages  at  December  31,  1996 is  $523,139
($327,573 and $195,566).  Both mortgages currently bear a fixed interest rate of
7.5% and are due December 5, 2003.  Current monthly  principal  payments on both
mortgages  are  based  upon a 27-year  amortization  schedule.  The  outstanding
balance  at  maturity  based  on the  current  rate  of  amortization  would  be
$4,449,434 ($2,786,095 and $1,663,339) of which the Partnership's  proportionate
share would be $458,292 ($286,968 and $171,324).

Golf  Brook  Apartments,  a joint  venture  between  the  Partnership  and  NTS-
Properties VI, is encumbered by a mortgage payable to an insurance company.  The
$9,200,000  mortgage payable is recorded as a liability by  NTS-Properties VI in
accordance with the Joint Venture Agreement. The mortgage bears a fixed interest
rate of 8.625%.  The unpaid  balance of the loan  ($9,200,000)  is due August 1,
1997.

As of December 31,  1996,  NTS-Properties  VI has obtained a commitment  from an
insurance  company for $9,000,000 of debt  financing.  The proceeds from the new
financing  along with cash reserves will be used to pay off NTS- Properties VI's
current  $9,200,000  mortgage  payable  discussed  above. The mortgage will bear
interest  at a fixed  rate of 7.43% and will be fully  amortized  over a 12 year
period.  Based upon the terms of the commitment,  NTS-Properties  VI anticipates
that the financing will be completed in April 1997.

Plainview Point III Office Center is not encumbered by any outstanding mortgages
as of December 31, 1996.

Blankenbaker  Business  Center  1A, a joint  venture  between  the  Partnership,
NTS-Properties  VII,  Ltd. and  NTS-Properties  Plus Ltd.,  is  encumbered  by a
mortgage payable to an insurance  company.  The outstanding  balance at December
31, 1996 was  $4,198,030.  The  mortgage is recorded as a liability of the Joint
Venture.  The Partnership's  proportionate  interest in the mortgage at December
31, 1996 is $1,262,767.  The mortgage bears interest at a fixed rate of 8.5% and
is due November 15, 2005. Currently monthly principal payments are based upon an
11-year amortization  schedule. At maturity,  the mortgage will have been repaid
based on the current rate of amortization.

The  properties  owned by the  Lakeshore/University  II Joint  Venture,  a joint
venture between the Partnership,  NTS-Properties V, NTS-Properties Plus Ltd. and
NTS/Fort  Lauderdale,  Ltd. are encumbered by mortgages  payable to an insurance
company as follows:

               Loan Balance
               at 12/31/96           Encumbered Property
               -----------           -------------------
               $5,924,638            Lakeshore Business Center Phase II
               $5,678,802            University Business Center Phase II
               $5,506,717            Lakeshore Business Center Phase I

The loans are recorded as a liability of the Joint  Venture.  The  Partnership's
proportionate  interest  in the  loans at  December  31,  1996  was  $1,057,548,
$1,013,666  and $982,949,  respectively.  The mortgages bear interest at a fixed
rate of  8.125%,  are due  August 1, 2008 and are  secured  by the assets of the
Joint Venture.  Monthly principal payments are based upon a 12-year amortization
schedule. At maturity, the loans will have been repaid based on the current rate
of amortization.

For a  further  discussion  regarding  the  terms  of the  debt  financings  see
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations (Item 7).


                                      - 5 -

<PAGE>



Items 1. and 2.  Business and Properties - Continued

General - Continued
-------------------

Currently,  the  Partnership's  plans for  renovations  and other major  capital
expenditures   include   tenant  finish   improvements   as  required  by  lease
negotiations  at  the  Partnership's  properties.   Changes  to  current  tenant
improvements are a typical part of any lease negotiation. Improvements generally
include a revision to the current floor plan to  accommodate  a tenant's  needs,
new  carpeting  and  paint  and/or  wallcovering.  The  extent  and  cost of the
improvements   are  determined  by  the  size  of  the  space  and  whether  the
improvements are for a new tenant or incurred because of a lease renewal.

Philip Crosby Associates, Inc. ("Crosby") has leased 100% of University Business
Center Phase II. The original  lease term is for seven years and the tenant took
occupancy in April 1991.  During the years ended  December  31,  1994,  1995 and
1996, Crosby sub-leased a portion of the business center. Currently,  Crosby has
sub-leased,  through the end of their lease term,  approximately  81,000  square
feet  (including  approximately  10,000  square  feet  of  mezzanine  space)  of
University  Business Center Phase II's  approximately  88,000 square feet of net
rentable  area (or 92%).  Of the total being  sub-leased,  approximately  69,000
square feet (or 85%) is being leased by Full Sail Recorders, Inc. ("Full Sail"),
a major tenant at University  Business  Center Phase I, a  neighboring  property
owned by an affiliate of the General  Partner of the  Partnership.  During 1994,
1995 and 1996,  Crosby continued to make rent payments  pursuant to the original
lease terms.  The Joint Venture has received  notice that Crosby does not intend
to pay full rental due under the original lease agreement from and after January
1997. The rental income from this property  accounts for approximately 6% of the
partnership's  total revenues.  The Joint Venture has instituted legal action to
seek resolution of this situation. Although the Joint Venture does not presently
have lease agreements  (except as noted below) with the sub-lessees noted above,
beginning  February  1997 rent  payments  from these  sublessees  are being made
directly  to the Joint  Venture.  The Joint  Venture  is  currently  negotiating
directly  with the  sub-lessees  to enter  into lease  agreements  for the space
presently sublet. At this time, the future leasing and tenant finish costs which
will be required to release this space are unknown except as noted below for the
negotiations with Full Sail.

In  December  1995,  Full  Sail  signed a 33 month  lease  with the L/U II Joint
Venture for  approximately  41,000  square  feet it  currently  sub-leases  from
Crosby. In November 1996, Full Sail signed a lease amendment which increased the
square  footage from 41,000  square feet to 48,000  square feet and extended the
lease term from 33 months to 76 months.  In November 1996, Full Sail also signed
a 52 month lease for the remaining approximately 21,000 square feet it presently
sub-leases  from Crosby.  Both lease terms  commence  April 1998 when the Crosby
lease ends. As part of the lease negotiations, Full Sail will receive a total of
$450,000 in special  tenant  allowances  ($200,000  resulting  from the original
lease signed  December  1995 and  $250,000  resulting  from the lease  amendment
signed  November  1996).  Approximately  $92,000 of the total allowance is to be
reimbursed  by  Full  Sail  to  the  L/U II  Joint  Venture.  The  Partnership's
proportionate   share  of  the  net   commitment   ($450,000  less  $92,000)  is
approximately  $64,000 or 18%. The tenant  allowance  will be due and payable to
Full Sail pursuant to the previously mentioned lease agreements,  as appropriate
invoices for tenant finish costs  incurred by Full Sail are submitted to the L/U
II Joint Venture.  The source of the funds for this commitment is expected to be
cash flow from operations and/or cash reserves.

Subsequent  to December 31, 1996,  the L/U II Joint Venture made a commitment of
approximately  $55,000 for tenant  finish  improvements  at  Lakeshore  Business
Center  Phase I as a result of a lease  renewal  and  expansion.  The  expansion
increases the tenant's current leased space by approximately 2,000

                                      - 6 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

General - Continued
-------------------

square feet and the renewal extends the lease for five years. The  Partnership's
proportionate  share of the  commitment  is  approximately  $10,000 or 18%.  The
project is  expected  to be  completed  during the second  quarter of 1997.  The
source of funds for this  project is  expected  to be cash flow from  operations
and/or cash reserves.

The  Partnership  had no other material  commitments  for renovations or capital
improvements as of December 31, 1996.

On July 23, 1996, the L/U II Joint Venture obtained three mortgage loans from an
insurance company totalling $17,400,000 ($6,025,000, $5,775,000 and $5,600,000).
The  outstanding  balances  of the loans at December  31, 1996 were  $5,924,638,
$5,678,802 and $5,506,717,  respectively,  for a total of $17,110,157. The loans
are  recorded  as  a  liability  of  the  Joint   Venture.   The   Partnership's
proportionate  interest  in the  loans at  December  31,  1996  was  $1,057,548,
$1,013,666 and $982,949,  respectively, for a total of $3,054,163. The mortgages
bear interest at a fixed rate of 8.125%,  are due August 1, 2008 and are secured
by the assets of the Joint Venture.  Monthly principal payments are based upon a
12-year  amortization  schedule.  At  maturity,  the loans will have been repaid
based on the current rate of amortization. The proceeds from the loans were used
to pay off the Joint  Venture's  notes  payable of  approximately  $16.8 million
which bore  interest at a fixed rate of 10.6% and to fund loan closing  costs of
approximately  $280,000.  The Partnership's  proportionate interest in the notes
which were paid off was  approximately  $3,000,000  or 18%. The notes which were
paid off had a maturity date of January 31, 1998. The remaining proceeds will be
used to fund Joint Venture tenant finish improvements and leasing costs.

The  Partnership is engaged solely in the business of developing,  constructing,
owning and  operating  residential  apartments  and  commercial  real estate.  A
presentation about industry segments is not applicable.

The current  business of the Partnership is consistent with the original purpose
of the Partnership which was to invest in real property,  which was either under
development or proposed for development,  on which it would develop,  construct,
own and operate apartment complexes,  business parks, and retail, industrial and
office  buildings.  The Partnership  properties are in a condition  suitable for
their intended use.

The Partnership  intends to hold the Properties until such time as sale or other
disposition   appears  to  be   advantageous   with  a  view  to  achieving  the
Partnership's  investment objectives or it appears that such objectives will not
be met. In deciding  whether to sell a Property,  the Partnership  will consider
factors such as potential capital appreciation, cash flow and Federal income tax
considerations,  including  possible  adverse Federal income tax consequences to
the  Limited  Partners.  The General  Partner of the  Partnership  is  currently
exploring  the  marketability  of  certain  of its  properties,  and has not yet
determined  if any of the  properties  might  be  sold in the  next  12  months.
Additionally, the outparcel building sites owned by the L/U II Joint Venture are
being marketed for sale.

Commonwealth Business Center Phase I
------------------------------------

Base annual rents,  which exclude the cost of  utilities,  currently  range from
$8.09 to $11.83 per square foot for ground  floor office  space,  $3.97 to $5.59
per square foot for ground floor  warehouse space and $7.32 to $10.72 per square
foot for mezzanine  office  space.  The average base annual rental for all space
leased as of December 31, 1996 was $8.00. Space is ordinarily leased for between
three and five years with the majority of current square


                                      - 7 -

<PAGE>



Items 1. and 2.  Business and Properties - Continued

Commonwealth Business Center Phase I - Continued
------------------------------------------------

footage  being  leased for a term of five years (1).  Current  leases  terminate
between 1997 and 2004. Several of the leases provide for renewal options ranging
from two to five years at rates which are based upon  increases  in the consumer
price index and/or are negotiated  between lessor and lessee. All leases provide
for tenants to contribute toward the payment of common area expenses,  insurance
and real estate taxes.  As of December 31, 1996,  there were 11 tenants  leasing
office and  warehouse  space  aggregating  approximately  48,724  square feet of
rentable area (2). The tenants who occupy  Commonwealth  Business Center Phase I
are    professional    service    oriented    organizations.    The    principal
occupations/professions  practiced include a stockbrokerage house, insurance and
environmental  engineering.  One  tenant  leases  more than 10% of  Commonwealth
Business  Center Phase I's rentable  area:  Mid-America  Data  Processing,  Inc.
(33.8%).  The occupancy levels at the business center as of December 31 were 86%
(1996 and 1995), 82% (1994), 75% (1993) and 77% (1992).

The following table contains approximate data concerning the leases in effect on
December 31, 1996.

Major Tenant:
                                                   Current Base
                                  Sq. Ft. and      Annual Rental
                                    % of Net      and % of Gross
                      Year of       Rentable        Base Annual        Renewal
       Name         Expiration      Area(2)           Rental           Options
       ----         ----------      -------           ------           -------

Mid-America Data
  Processing, Inc.     2004      19,101 (33.8%)  $304,116 (52.5%)       None



Other Tenants:

                                                 Current Base
                              Sq. Ft. and       Annual Rental
                                % of Net       and % of Gross
      No. of      Year of       Rentable         Base Annual          Renewal
      Tenants    Expiration     Area(2)            Rental             Options
      -------    ----------     -------            ------             -------

         4          1997     12,009 (21.3%)   $  99,590(17.1%)      2 Two-Year
         1          1998      1,604  (2.8%)   $  10,875 (1.9%)          None
         2          1999      8,793 (15.5%)   $ 105,924(18.3%)      3 Three-Year
         2          2000      4,027  (7.1%)   $  35,964 (6.2%)          (3)
         1          2001      3,190  (5.6%)   $  22,870 (3.9%)          None


(1)   Excluding the Mid-America Data Processing, Inc. current lease which is for
      10 years.
(2) Rentable area includes only ground square feet (office and warehouse space).
(3) 2 Three-Year and 1 Five-Year.

Plainview Point Office Center Phases I and II
---------------------------------------------

Except as indicated in the table below,  base annual  rents,  which  include the
cost of utilities,  currently  range from $11.69 to $13.50 per square foot.  The
average base annual rental as of December 31, 1996 was approximately  $12.42 per
square  foot.  Office space is  ordinarily  leased for between two to five years
with the  majority of current  square  footage  being leased for a term of three
years (4). Current leases terminate between 1997 and 2006.

(4)   Excluding the ITT Educational Services, Inc. lease which is  for 10 years
      and the Independent Life and Accident Insurance lease which is for 10 1/2
      years.


                                      - 8 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

Plainview Point Office Center Phases I and II - Continued
---------------------------------------------------------

One lease  provides  for a renewal  option of five years at a rate which will be
negotiated  between  lessor  and  lessee.  All  leases  provide  for  tenants to
contribute  toward the payment of increases in common area  maintenanceexpenses,
insurance,  utilities and real estate taxes. As of December 31, 1996, there were
11 tenants leasing office space aggregating  approximately 49,274 square feet of
rentable area. The tenants who occupy Plainview Point Office Center Phases I and
II   are   professional   service   oriented   organizations.    The   principal
occupations/professions  practiced  include a  business  school,  state  lottery
management  offices,  telemarketing  services and respiratory  therapy services.
Three tenants lease more than 10% of Plainview  Point Office  Center's  rentable
area: ICT Group,  Inc.  (10.8%),  Kentucky Lottery  Corporation  (11.4%) and ITT
Educational Services, Inc. (36.2%). The occupancy levels at the office center as
of  December  31 were 88% (1996),  85%  (1995),  74% (1994),  43% (1993) and 40%
(1992).

The following table contains approximate data concerning the leases in effect on
December 31, 1996.

Major Tenants:
                                                    Current Base
                                  Sq. Ft. and       Annual Rental
                                    % of Net       and % of Gross
                       Year of      Rentable         Base Annual      Renewal
      Name           Expiration       Area             Rental         Options
      ----           ----------       ----             ------         -------

   ICT Group, Inc.      1998      6,031 (10.8%)  $ 70,524 (12.6%)    None
   Kentucky Lottery
    Corporation         1997      6,374 (11.4%)  $ 73,296 (13.1%)(1) None
   ITT Educational
    Services, Inc.      2004     20,232 (36.2%)  $204,948 (36.6%)(2) 1 Five-Year

(1)   The lease provides that the tenant will pay its own  electricity  and thus
      the base rent is below $12.42.
(2)   The  lease  provides  that the  tenant  will pay its own  electricity  and
      janitorial and thus the base rent is below $12.42.

Other Tenants:

                                                 Current Base
                              Sq. Ft. and        Annual Rental
                                % of Net        and % of Gross
      No. of      Year of       Rentable         Base Annual       Renewal
      Tenants   Expiration        Area              Rental         Options
      -------   ----------        ----              ------         -------

         4          1997      8,497 (15.2%)    $111,549 (19.9%)      None
         2          1998      1,643 ( 3.0%)    $ 20,436 ( 3.7%)      None
         1          1999      2,338 ( 4.2%)    $ 29,225 ( 5.2%)      None
        None     2000-2005         --                  --            None
         1          2006      4,159 ( 7.4%)    $ 49,908  (8.9%)      None

The Willows of Plainview Phase I
--------------------------------

Units at The Willows of Plainview Phase I include one and  two-bedroom  loft and
deluxe  apartments  and  two-bedroom  townhomes.  All  units  have  wall-to-wall
carpeting,  individually  controlled heating and air conditioning,  dishwashers,
ranges,  refrigerators  and garbage  disposals.  All units,  except  one-bedroom
lofts, have washer/dryer  hook-ups. The one-bedroom lofts have stackable washers
and dryers.  Tenants  have access to and the use of  coin-operated  washer/dryer
facilities, clubhouse, management offices, pool, whirlpool and tennis courts.




                                      - 9 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

The Willows of Plainview Phase I - Continued
--------------------------------------------

Monthly  rental  rates at start at $619  for  one-bedroom  apartments,  $879 for
two-bedroom  apartments  and $979 for  two-bedroom  townhomes,  with  additional
monthly rental amounts for special features and locations. Tenants pay all costs
of heating,  air conditioning  and electricity.  Most leases are for a period of
one year. Units will be rented in some cases,  however,  on a shorter term basis
at an additional  charge.  The occupancy  levels at the apartment  complex as of
December 31 were 89% (1996), 91% (1995), 87% (1994), 87% (1993) and 85% (1992).

The Willows of Plainview Phase II
---------------------------------

See the discussion  under The Willows of Plainview Phase I. Monthly rental rates
at The Willows of Plainview Phase II start at $619 for  one-bedroom  apartments,
$879  for  two-bedroom  apartments  and  $999 for  two-bedroom  townhomes,  with
additional  monthly  rental  amounts for special  features  and  locations.  The
occupancy levels at the apartment complex as of December 31 were 92% (1996), 94%
(1995), 93% (1994), 91% (1993) and 90% (1992).

Golf Brook Apartments
---------------------

Units at Golf Brook Apartments  include two and  three-bedroom  units. All units
have   wall-to-wall   carpeting,   individually   controlled   heating  and  air
conditioning,   dishwashers,   ranges,  refrigerators,   garbage  disposals  and
washer/dryer hook-ups.  Tenants have access to and use of clubhouse,  management
offices, pool and tennis courts.

Monthly rental rates at Golf Brook  Apartments  start at $1,120 for  two-bedroom
apartments and $1,350 for  three-bedroom  apartments,  with  additional  monthly
rental  amounts for special  features  and  locations.  Tenants pay all costs of
heating,  air conditioning and electricity.  Most leases are for a period of one
year. Units will be rented in some cases, however, on a shorter term basis at an
additional  charge. The occupancy levels at the apartment complex as of December
31 were 97% (1996), 91% (1995), 93% (1994), 91% (1993) and 94% (1992).

Plainview Point III Office Center
---------------------------------

Base annual rents,  which  include the cost of  utilities,  range from $13.90 to
$15.00 per square foot for first and second  floor  office  space and $13.00 per
square foot for lower level office space. The average base annual rental for all
types of space leased as of December 31, 1996 was $14.16 per square foot. Office
space is  ordinarily  leased for between two and six years with the  majority of
current  square  footage being leased for a term of five years.  Current  leases
terminate  between  1997 and 2001.  Some leases  provide for renewal  options of
between  two and five  years at rates  which are  based  upon  increases  in the
consumer price index and/or are negotiated between lessor and lessee. All leases
provide for tenants to contribute toward the payment of increases in common area
maintenance expenses, insurance, utilities and real estate taxes. As of December
31, 1996, there were six tenants leasing space aggregating  approximately 56,882
square feet of rentable area. The tenants who occupy  Plainview Point III Office
Center  are   professional   service  oriented   organizations.   The  principal
occupations/professions  practiced  include  real  estate  and  insurance.  Four
tenants lease more than 10% of the office center's rentable area: The Prudential
Company of America (10.4%),  Underwriters Safety & Claims, Inc. (18.4%),  RE/MAX
Properties East, Inc.  (24.5%) and Univa Health Network  (26.8%).  The occupancy
levels at the office  center as of  December  31 were 91% (1996 ,1995 and 1994),
87% (1993) and 95% (1992).



                                     - 10 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

Plainview Point III Office Center - Continued
---------------------------------------------


The following table contains approximate data concerning the leases in effect on
December 31, 1996.

Major Tenants:
                                                    Current Base
                                     Sq. Ft. and    Annual Rental
                                       % of Net    and % of Gross
                          Year of      Rentable      Base Annual       Renewal
      Name              Expiration       Area          Rental          Options
      ----              ----------       ----          ------          -------

The Prudential Company
  of America              1997       6,474 (10.4%)  $ 95,964 (11.9%) 1 Five-Year
Underwriters Safety &
  Claims, Inc.            2001      11,535 (18.4%)  $149,952 (18.6%)     None
RE/MAX Properties East,
  Inc.                    1999      15,300 (24.5%)  $225,600 (28.0%) 1 Two-Year
Univa Health Network      2000      16,727 (26.8%)  $232,500 (28.9%) 1 Five-Year


Other Tenants:
                                              Current Base
                              Sq. Ft. and     Annual Rental
                                % of Net     and % of Gross
      No. of     Year of       Rentable        Base Annual        Renewal
      Tenants   Expiration       Area            Rental           Options
      -------   ----------       ----            ------           -------

        None     1997-1999        --               --               --
         2         2000      6,846 (10.9%)  $101,604 (12.6%)   1 Three-Year


Blankenbaker Business Center 1A
-------------------------------

Prudential Service Bureau, Inc. has leased 100% of Blankenbaker  Business Center
1A. The annual base rent, which does not include the cost of utilities, is $7.89
per square  foot for ground  floor  office  space and $7.10 per square  foot for
second floor office space. The average base annual rental for all types of space
leased as of  December  31,  1996 was $7.48.  The lease term is for 11 years and
expires in July 2005.  Prudential Service Bureau, Inc. is a professional service
oriented  organization  which deals in  insurance  claim  processing.  The lease
provides  for the  tenant to  contribute  toward  the  payment  of  common  area
expenses, insurance and real estate taxes.

The occupancy level at the business center as of December 31, 1996,  1995, 1994,
1993 and 1992 was 100%.

The following table contains  approximate data concerning the lease in effect as
of December 31, 1996:

Major Tenant:
                                                  Current Base
                                 Sq. Ft. and      Annual Rental
                                  % of Net       and % of Gross
                     Year of      Rentable         Base Annual     Renewal
       Name        Expiration      Area(1)           Rental        Options
       ----        ----------      -------           ------        -------

Prudential Service
  Bureau, Inc.        2005      48,463 (100%)    $752,787 (100%)    None

(1)   Rentable area includes only ground floor square feet.




                                     - 11 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

Lakeshore Business Center Phase I
---------------------------------

Base annual rents,  which exclude the cost of  utilities,  currently  range from
$9.11 to $12.47 per square foot for first floor office space, $5.69 to $7.80 per
square  foot for first floor  service  space and $8.75 to $11.25 per square foot
for second floor office  space.  The average base rental for all space leased as
of December 31, 1996 was $9.96.  Space is ordinarily  leased for between one and
eight years with the majority of current  square footage being leased for a term
of five years.  Current  leases expire between 1997 and 2002. All leases provide
for tenants to contribute toward the payment of common area expenses,  insurance
and real estate taxes.  As of December 31, 1996,  there were 33 tenants  leasing
office  space   (first  and  second   floor)  and  service   space   aggregating
approximately  95,651  square  feet of  rentable  area.  The  tenants who occupy
Lakeshore   Business   Center  Phase  I  are   professional   service   oriented
organizations.   The   principal   occupations/professions   practiced   include
healthcare services,  telemarketing services, engineering and management offices
for both a cellular  communication  chain and a soft drink  company.  One tenant
leases more than 10% of Lakeshore  Business Center Phase I's rentable area: U.S.
Homecare  Infusion Therapy Products of Florida (11.7%).  The occupancy levels at
the business center as of December 31 were 92% (1996 and 1995), 80% (1994),  58%
(1993) and 55% (1992).

The following table contains approximate data concerning the leases in effect on
December 31, 1996.

Major Tenant:
                                                  Current Base
                                  Sq. Ft. and     Annual Rental
                                   % of Net      and % of Gross
                     Year of       Rentable        Base Annual     Renewal
       Name        Expiration        Area            Rental        Options
       ----        ----------        ----            ------        -------

U.S. Homecare
 Infusion Therapy
 Products of
 Florida              1998      12,081 (11.7%)  $135,912 (14.3%)    (1)

(1)   Tenant has option to renew its lease for an unspecified period of time.

Other Tenants:

                                                  Current Base
                               Sq. Ft. and        Annual Rental
                                 % of Net        and % of Gross
      No. of      Year of        Rentable          Base Annual     Renewal
      Tenants    Expiration        Area              Rental        Options
      -------    ----------        ----              ------        -------

         5          1997      10,326 (10.0%)    $101,472 (10.7%)   None
        12          1998      21,554 (21.1%)    $212,263 (22.3%)   None
         6          1999      29,999 (29.0%)    $290,436 (30.5%)   4 Three-Year
         6          2000      17,322 (16.7%)    $169,356 (17.8%)   2 Three-Year
         None       2001            --                  --             --
         3          2002       4,369  (4.2%)    $ 43,224  (4.6%)   2 Three-Year


Lakeshore Business Center Phase II
----------------------------------

Base annual rents,  which exclude the cost of  utilities,  currently  range from
$9.97 to $12.02 per square foot for first floor office  space,  $6.52 per square
foot for first  floor  service  space and $9.80 to $14.95  per  square  foot for
second  floor office  space.  The average base rental for all space leased as of
December 31, 1996 was $11.21. Space is ordinarily leased for



                                     - 12 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

Lakeshore Business Center Phase II - Continued
----------------------------------------------

between one and seven years with the majority of current  square  footage  being
leased for a term of three years.  Current  leases expire between 1997 and 2002.
Five leases provide for renewal  options at rates which are based upon increases
in the consumer price index and/or are negotiated between lessor and lessee. All
leases  provide  for  tenants to  contribute  toward the  payment of common area
expenses,  insurance and real estate taxes. As of December 31, 1996,  there were
19 tenants  leasing  office  space  (first and second  floor) and service  space
aggregating  approximately  84,835 square feet of rentable area (1). The tenants
who occupy Lakeshore Business Center Phase II are professional  service oriented
organizations.   The   principal   occupations/professions   practiced   include
healthcare  services,  insurance  and  management  offices for the Florida state
lottery.  Three tenants leases more than 10% of Lakeshore  Business Center Phase
II's rentable area: Northwest Medical Center, Inc (10.4%),  Progressive American
Insurance(10.9%) and Lambda Physik (11.1%). The occupancy levels at the business
center as of December 31 were 89% (1996),72%  (1995), 78% (1994), 75% (1993) and
84% (1992).

The following table contains approximate data concerning the leases in effect on
December 31, 1996:

Major Tenant:
                                                   Current Base
                                   Sq. Ft. and     Annual Rental
                                    % of Net      and % of Gross
                       Year of      Rentable        Base Annual        Renewal
       Name          Expiration     Area (1)          Rental           Options
       ----          ----------     --------          ------           -------

Northwest Medical
 Center, Inc             2000    10,132 (10.4%)  $120,636 (12.7%)   None
Progressive American
 Insurance               1999    10,580 (10.9%)  $127,176 (13.4%)   1 Three-Year
Lambda Physik            2002    10,829 (11.1%)  $119,112 (12.5%)   1 Five-year

Other Tenants:
                                               Current Base
                              Sq. Ft. and      Annual Rental
                                % of Net      and % of Gross
      No. of    Year of        Rentable         Base Annual        Renewal
      Tenants  Expiration       Area(1)           Rental           Options
      -------  ----------       -------           ------           -------

         4        1997      16,031 (16.4%)   $174,654 (18.4%)   None
         3        1998       8,807  (9.0%)   $100,816 (10.6%)   (2)
         4        1999      11,566 (11.9%)   $128,970 (13.6%)   1 Three-Year
         4        2000       9,819 (10.1%)   $109,282 (11.5%)   None
         1        2001       7,071  (7.3%)   $ 70,704  (7.4%)   None


(1)   Excludes approximately 1,218 square feet which is occupied by the business
      center's property management and leasing staff.
(2)   1 Two-Year and 1 Three-Year.

University Business Center Phase II
-----------------------------------

Philip Crosby  Associates,  Inc. has leased 100% of University  Business  Center
Phase II.  (See above for a further  discussion  regarding  Crosby and its lease
with the Joint Venture).  The annual base rent,  which does not include the cost
of utilities,  is $13.00 per square foot for first floor office space, $8.50 per
square foot for first  floor  service  space,  $14.00 per square foot for second
floor office space and $13.00 per square foot for mezzanine  office  space.  The
average base annual rental for all types of space leased as of December 31, 1996
was $12.43. The lease term is for seven years and





                                     - 13 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

University Business Center Phase II - Continued
-----------------------------------------------

expires in 1998.  Philip  Crosby  Associates,  Inc.  is a  professional  service
oriented  organization which specializes in quality control seminars.  The lease
provides  for the  tenant to  contribute  toward  the  payment  of  common  area
expenses,  insurance and real estate taxes.  The occupancy level at the business
center as of  December 31 was 99%  (1996),  95% (1995) and 100% (1994,  1993 and
1992).

The following table contains  approximate data concerning the lease in effect as
of December 31, 1996.

Major Tenant:
                                                  Current Base
                                 Sq. Ft. and      Annual Rental
                                  % of Net       and % of Gross
                      Year of     Rentable         Base Annual        Renewal
       Name         Expiration      Area(1)          Rental           Options
       ----         ----------      -------          ------           -------

Philip Crosby
 Associates, Inc.      1998     75,975 (100%)  $1,072,920 (100%)    1 Five-Year

(1)   Rentable area  includes only first floor (office and service)  square feet
      and second floor office square feet. (See above for further  discussion on
      sublet space.)


Additional operating data regarding the Partnership's properties is furnished in
the following table.


                                Federal       Realty            Annual
                              Tax Basis     Tax Rate        Realty Taxes
                              ---------     --------        ------------
Wholly-Owned Properties
-----------------------
Commonwealth Business
Center Phase I               $3,995,722     $.011000          $ 35,857

Plainview Point Office
Center Phases I and II        3,441,504      .011200            18,083

The Willows of
Plainview Phase I             7,355,682      .011200            51,127

Property Owned in Joint
Venture with NTS-
Properties V
------------
The Willows of
Plainview Phase II            7,863,123      .011200            58,439








                           (Table continued next page)



                                     - 14 -

<PAGE>


Items 1. and 2. Business and Properties - Continued



                               Federal         Realty           Annual
                              Tax Basis       Tax Rate       Realty Taxes
                              ---------       --------       ------------
Properties Owned in
Joint Venture with NTS-
Properties VI
-------------
Golf Brook Apartments       $16,100,810      $ .018935        $  259,816

Plainview Point III
Office Center                 4,189,222        .011200            34,911

Property Owned in Joint
Venture with NTS-
Properties VII and NTS-
Properties Plus Ltd.
--------------------
Blankenbaker Business
Center 1A                     7,356,545        .011000            68,090

Properties Owned
Through Lakeshore/
University II Joint
Venture (L/U II Joint
Venture
-------
Lakeshore Business
Center Phase I               10,087,575        .026559           145,704

Lakeshore Business
Center Phase II              12,105,721        .026559           131,503

University Business
Center Phase II               7,104,723        .020111           107,508

Percentage  ownership has not been applied to the information in the above table
for properties owned through a joint venture.

Depreciation for book purposes is computed using the  straight-line  method over
the  estimated  useful  lives of the  assets  which  are 5 - 30  years  for land
improvements, 30 years for buildings, 5 - 30 years for building improvements and
5 - 30 years for amenities.  The estimated realty taxes on planned  renovations,
primarily tenant improvements, is not material.

See Management's Discussion and Analysis of Financial Condition and Results
of Operations (Item 7) for explanations regarding the fluctuations of income
and occupancy at the Partnership's properties.

Investment in Joint Ventures
----------------------------

NTS Willows  Phase II Joint  Venture - On  September  1, 1984,  the  Partnership
entered  into a  joint  venture  agreement  with  NTS-Properties  V to  develop,
construct, own and operate a 144 - unit luxury apartment complex on an 8.29 acre
site in  Louisville,  Kentucky  known as The Willows of Plainview  Phase II. The
term of the Joint Venture shall continue until dissolved.





                                     - 15 -

<PAGE>




Items 1. and 2. Business and Properties - Continued

Investment in Joint Ventures - Continued
----------------------------------------

Dissolution  shall  occur  upon,  but not  before,  the  first  to  occur of the
following:

      (a)     the withdrawal, bankruptcy or dissolution of a Partner or the
              execution by a Partner of an assignment for the benefit of its
              creditors;

      (b)     the sale, condemnation or taking by eminent domain of all or
              substantially all of the assets of the Partnership, other than its
              cash and cash equivalent assets;

      (c)     the vote or consent of each of the Partners to dissolve the
              Partnership; or

      (d)     September 30, 2028.

The  Partnership  contributed  land  valued at  $800,000  and  NTS-Properties  V
contributed approximately $7,455,000, the construction and carrying costs of the
apartment  complex.  No future  contributions are anticipated as of December 31,
1996.

The apartment  complex is encumbered by permanent  mortgages  with two insurance
companies.  Both loans are  secured by a first  mortgage  on the  property.  The
outstanding  balance  of the  mortgages  at  December  31,  1996  is  $5,143,945
($3,220,975  and  $1,922,970).  The mortgages are recorded as a liability of the
Joint  Venture.  The  Partnership's  proportionate  interest in the mortgages at
December 31, 1996 is $523,139 ($327,573 and $195,566).  Both mortgages currently
bear a fixed interest rate of 7.5% and are due December 5, 2003. The outstanding
balance  at  maturity  based  on the  current  rate  of  amortization  would  be
$4,449,434 ($2,786,095 and $1,663,339) of which the Partnership's  proportionate
share would be $458,292 ($286,968 and $171,324). See Management's Discussion and
Analysis of Financial Condition and Results of Operations (Item 7) for a further
discussion regarding the terms of the debt financing.

The Net Cash Flow for each calendar  quarter is  distributed  to the Partners in
accordance with their respective  Percentage  Interests.  The term Net Cash Flow
means the excess,  if any, of (A) the gross  receipts from the operations of the
Joint Venture Property  (including  investment  income) for such period plus any
funds released from previously  established reserves (referred to in clause (iv)
below),  over (B) the sum of (i) all cash  operating  expenses paid by the Joint
Venture  Property  during such period in the course of  business,  (ii)  capital
expenditures  during such period not funded by capital  contributions,  loans or
paid out of previously  established reserves,  (iii) payments during such period
on account of  amortization  of the principal of any debts or liabilities of the
Joint Venture  property and (iv) reserves for contingent  liabilities and future
expenses  of  the  Joint  Venture  Property.   Percentage  Interest  means  that
percentage  which the capital  contributions of a Partner bears to the aggregate
capital contributions of all the Partners.

Net income or net loss is  allocated  between the  Partners in  accordance  with
their respective Percentage Interests. The Partnership's ownership share was 10%
at December 31, 1996.

The  Partnership  has no liability for funding losses of the joint venture as of
December 31, 1996.



                                     - 16 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

Investment in Joint Ventures - Continued
----------------------------------------

NTS Ft.  Lauderdale  Office Joint  Venture - On April 1, 1985,  the  Partnership
entered  into a  joint  venture  agreement  with  NTS-Properties  V to  develop,
construct,  own and  operate an office  warehouse  building  in Ft.  Lauderdale,
Florida known as Lakeshore Business Center Phase I.

The  Partnership  contributed  land valued at $1,752,982  and  NTS-Properties  V
contributed approximately  $9,170,000,  the cost of constructing and leasing the
building.  On January 23, 1995,  the partners of the NTS Ft.  Lauderdale  Office
Joint Venture contributed  Lakeshore Business Center Phase I to the newly formed
Lakeshore/University  II (L/U II) Joint Venture. For a further discussion of the
Lakeshore/University II Joint Venture, see below.

NTS Sabal Golf Villas  Joint  Venture - On September  1, 1985,  the  Partnership
entered  into a joint  venture  agreement  with  NTS-Properties  VI to  develop,
construct,  own and operate a 158-unit luxury apartment  complex on a 13.15 acre
site in Orlando,  Florida known as Golf Brook  Apartments Phase I. On January 1,
1987, the joint venture  agreement was amended to include Golf Brook  Apartments
Phase  II, a 37-unit  luxury  apartment  complex  located  on a 3.069  acre site
adjacent to Golf Brook  Apartments  Phase I. The term of the Joint Venture shall
continue until  dissolved.  Dissolution  shall occur upon,  but not before,  the
first to occur of the following:

      (a)     the withdrawal, bankruptcy or dissolution of a Partner or the
              execution by a Partner of an assignment for the benefit of its
              creditors;

      (b)     the sale, condemnation or taking by eminent domain of all or
              substantially all of the assets of the Partnership, other than its
              cash and cash-equivalent assets;

      (c)     the vote or consent of each of the Partners to dissolve the
              Partnership; or

      (d)     September 30, 2025.

The  Partnership  contributed  land  valued at  $1,900,000  with a related  note
payable to a bank of $1,200,000.  NTS-Properties  VI  contributed  approximately
$15.8  million,   the  cost  of   constructing   and  leasing  the   apartments.
NTS-Properties  VI also contributed  funds to retire the $1,200,000 note payable
to a bank. No future contributions are anticipated as of December 31, 1996.

Golf Brooks  Apartments  is  encumbered  by a mortgage  payable to an  insurance
company.  This  mortgage  payable  replaced  the  Contribution  Loan  which NTS-
Properties VI had obtained to fund a portion of its capital  contribution to the
Joint  Venture.  The $9,200,000  mortgage  payable is recorded as a liability by
NTS-Properties VI in accordance with the Joint Venture  Agreement.  The mortgage
bears  a  fixed  interest  rate  of  8.625%.  The  unpaid  balance  of the  loan
($9,200,000)  is due August 1, 1997.  See above for  information  regarding  the
refinancing of this mortgage.

The Net Cash Flow for each calendar  quarter is  distributed  to the Partners in
accordance with their respective  Percentage  Interests.  The Term Net Cash Flow
means the excess,  if any, of (a) the sum of (i) the gross receipts of the Joint
Venture Property, for such period, other than capital  contributions,  plus (ii)
any funds from previously  established  reserves (referred to in clause (b) (iv)
below),  over (b) the sum of (i) all cash  expenses  paid by the  Joint  Venture
Property during such period,  (ii) all capital  expenditures paid in cash during
such period, (iii) payments during such period on account of amortization of the
principal of any debts or

                                     - 17 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

Investment in Joint Ventures - Continued
----------------------------------------

liabilities  of the Joint Venture  Property,  and (iv)  reserves for  contingent
liabilities and future expenses of the Joint Venture Property, as established by
the Partners;  provided,  however, that the amounts referred to in (i), (ii) and
(iii)  above  shall be taken in to  account  only to the  extent  not  funded by
capital contributions or paid out of previously established reserves. Percentage
Interest  means that  percentage  which the capital  contributions  of a Partner
bears to the aggregate capital contributions of all the Partners.

Net income or net loss is  allocated  between the  Partners in  accordance  with
their respective Percentage Interests.  The Partnership's ownership share was 4%
at December 31, 1996.

The  Partnership  has no liability for funding losses of the joint venture as of
December 31, 1996.

Plainview  Point III Joint Venture - On March 1, 1987, the  Partnership  entered
into a joint venture agreement with NTS-Properties VI to develop, construct, own
and operate an office building in Louisville,  Kentucky known as Plainview Point
III  Office  Center.  The  terms  of the  Joint  Venture  shall  continue  until
dissolved.  Dissolution shall occur upon, but not before,  the first to occur of
the following:

      (a)     the withdrawal, bankruptcy or dissolution of a Partner or the
              execution by a Partner of an assignment for the benefit of its
              creditors;

      (b)     the  sale,  condemnation  or taking  by  eminent  domain of all or
              substantially all of the assets of the Real Property,  unless such
              disposition  is, in whole or in part,  represented by a promissory
              note of the purchaser;

      (c)     the vote or consent of each of the Partners to dissolve the
              Partnership; or

      (d)     December 30, 2026.

The  Partnership  contributed  land valued at $790,000 with an outstanding  note
payable to a bank of $550,000 which was secured by the land.  NTS-Properties  VI
contributed  approximately  $4.1  million,  the cost to construct  and lease the
building.  NTS-Properties  VI also contributed funds to retire the $550,000 note
payable to the bank. No future  contributions are anticipated as of December 31,
1996.

The office center is not encumbered by any outstanding  mortgages as of December
31, 1996.

The Net Cash Flow for each calendar  quarter is  distributed  to the Partners in
accordance with their respective  Percentage  Interests.  The term Net Cash Flow
means the excess,  if any, of (a) the sum of (i) the gross receipts of the Joint
Venture Property, for such period, other than capital  contributions,  plus (ii)
any funds from previously  established  reserves (referred to in clause (b) (iv)
below),  over (b) the sum of (i) all cash  expenses  paid by the  Joint  Venture
Property during such period,  (ii) all capital  expenditures paid in cash during
such period, (iii) payments during such period on account of amortization of the
principal of any debts or  liabilities of the Joint Venture  Property,  and (iv)
reserves for  contingent  liabilities  and future  expenses of the Joint Venture
Property,  as established by the Partners;  provided,  however, that the amounts
referred to in (i),  (ii) and (iii)  above shall be taken in to account  only to
the

                                     - 18 -

<PAGE>




Items 1. and 2. Business and Properties - Continued

Investment in Joint Ventures - Continued
----------------------------------------

extent not funded by capital contributions or paid out of previously established
reserves.   Percentage   Interest  means  that  percentage   which  the  capital
contributions of a Partner bears to the aggregate  capital  contributions of all
the Partners.

Net income or net loss is  allocated  between the  Partners in  accordance  with
their respective Percentage Interests.  The Partnership's ownership share was 5%
at December 31, 1996.

The  Partnership  has no liability for funding losses of the joint venture as of
December 31, 1996.

Blankenbaker   Business   Center  Joint  Venture  -  On  August  16,  1994,  the
Blankenbaker  Business  Center Joint Venture  agreement was amended to admit the
Partnership  to the Joint Venture.  The Joint Venture was  originally  formed on
December 28, 1990 between  NTS-Properties  Plus Ltd.  and NTS-  Properties  VII,
Ltd.,  affiliates of the general partner of the Partnership,  to own and operate
Blankenbaker  Business  Center  1A and to  acquire  an  approximately  2.49 acre
parking lot that was being  leased by the  business  center from an affiliate of
the general  partner.  The use of the parking lot is a provision of the tenant's
lease agreement with the business  center.  The terms of the Joint Venture shall
continue until  dissolved.  Dissolution  shall occur upon,  but not before,  the
first to occur of the following:

      (a)     the withdrawal, bankruptcy or dissolution of a Partner or the
              execution by a Partner of an assignment for the benefit of its
              creditors;

      (b)     the  sale,  condemnation  or taking  by  eminent  domain of all or
              substantially  all of the assets of the Real  Property and Parking
              Lot  and  the  sale  and/or   collection   of  any   evidences  of
              indebtedness received in connection therewith;

      (c)     the vote or consent of each of the Partners to dissolve the
              Partnership; or

      (d)     December 31, 2030.

In 1990 when the Joint Venture was originally formed,  NTS-Properties  VII, Ltd.
contributed  $450,000 which was used for additional  tenant  improvements to the
business center, and contributed $325,000 to purchase the 2.49 acre parking lot.
The  additional  tenant  improvements  were made to the business  center and the
parking  lot  was  purchased  in  1991.  NTS-Properties  Plus  Ltd.  contributed
Blankenbaker Business Center 1A together with improvements and personal property
subject to mortgage indebtedness of $4,715,000.  During November 1994, this note
payable was replaced with permanent  financing in the amount of $4,800,000.  The
mortgage  bears  interest at a fixed rate of 8.5% and is due  November  15,2005.
Current monthly principal  payments are based upon an 11-year  amortization.  At
maturity,  the  mortgage  will have been  repaid  based on the  current  rate of
amortization.

On April 28, 1994,  the Joint Venture  obtained  $1,100,000 in debt financing to
fund a portion of the tenant finish and leasing costs which are associated  with
the Prudential Service Bureau,  Inc. lease renewal and expansion.  For a further
discussion of the lease renewal and expansion,  see Management's  Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations  (Item 7).  The
$1,100,000 note bore interest at the Prime Rate + 1 1/2%. In order for the Joint
Venture to obtain the $4,800,000 of permanent  financing discussed above, it was
necessary for the Joint Venture

                                     - 19 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

Investment in Joint Ventures - Continued
----------------------------------------

to seek an additional  Joint Venture  partner to provide the funds necessary for
the tenant finish and leasing costs instead of debt  financing.  The  $1,100,000
note was retired in August 1994. This resulted in the Joint Venture's debt being
at a level where permanent financing could be obtained and serviced.

On August 16, 1994, NTS-Properties IV contributed $1,100,000 and NTS- Properties
VII, Ltd.  contributed  $500,000 in  accordance  with the agreement to amend the
Joint Venture. The need for additional capital by the Joint Venture was a result
of the lease renewal and  expansion  which was signed April 28, 1994 between the
Joint Venture and Prudential.  NTS-Properties Plus Ltd. was not in a position to
contribute additional capital, nor was NTS-Properties VII, Ltd. in a position to
contribute all of the capital required for this project.  NTS-Properties  IV was
willing to  participate  in the Joint Venture and to  contribute,  together with
NTS-Properties  VII,  Ltd.,  the capital  necessary with respect to the project.
NTS-Properties  Plus Ltd.  agreed to the admission of  NTS-Properties  IV to the
Joint  Venture,  and to  the  capital  contributions  by  NTS-Properties  IV and
NTS-Properties  VII,  Ltd. with the  knowledge  that its joint venture  interest
would, as a result, decrease. With this expansion,  Prudential now occupies 100%
of the business center.  No future  contributions are anticipated as of December
31, 1996.

The Net Cash Flow for each calendar  quarter is  distributed  to the Partners in
accordance with the respective Percentage Interests.  The term Net Cash Flow for
any  period  shall  mean the  excess,  if any,  of (A) the sum of (i) the  gross
receipts of the Joint  Venture  Property  for such  period,  other than  capital
contributions,  plus (ii) any funds  released by the  Partners  from  previously
established reserves (referred to in clause (B) (iv) below), over (B) the sum of
(i) all cash operating  expenses paid by the Joint Venture  Property during such
period in the course of the  business,  (ii) capital  expenditures  paid in cash
during such period, (iii) payments during such period on account of amortization
of the principal of any debts or liabilities  of the Joint Venture  Property and
(iv)  reserves  for  contingent  liabilities  and future  expenses  of the Joint
Venture  Property as established by the Partners;  provided,  however,  that the
amounts  referred  to in (B)(i),  (ii) and (iii)  above shall only be taken into
account  to the  extent  not  funded  by  capital  contributions  or paid out of
previously established reserves. Percentage Interest means that percentage which
the  capital   contributions  of  a  Partner  bears  to  the  aggregate  capital
contributions of all the Partners.

Net income or net loss is  allocated  between the  Partners in  accordance  with
their respective Percentage Interests. The Partnership's ownership share was 30%
at December 31, 1996.

The  Partnership  has no liability for funding losses of the joint venture as of
December 31, 1996.

Lakeshore/University II Joint Venture - On January 23, 1995, a new joint venture
known as Lakeshore/University II Joint Venture (L/U II Joint Venture) was formed
among the  Partnership  and  NTS-Properties  V, NTS-  Properties  Plus Ltd.  and
NTS/Fort Lauderdale, Ltd., affiliates of the general partner of the Partnership,
for purposes of owning  Lakeshore  Business  Center Phases I and II,  University
Business Center Phase II and certain  undeveloped tracts of land adjacent to the
Lakeshore  Business  Center  development.   The  table  below  identifies  which
properties  were  contributed  to the L/U II Joint  Venture  and the  respective
owners of such properties prior to the formation of the joint venture.



                                     - 20 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

Investment in Joint Ventures - Continued
----------------------------------------



               Property                                 Contributing Owner
               --------                                 ------------------

      Lakeshore Business Center Phase I             NTS-Properties IV and NTS-
                                  Properties V

      Lakeshore Business Center Phase II            NTS-Properties Plus Ltd.

      Undeveloped land adjacent to the              NTS-Properties Plus Ltd.
      Lakeshore Business Center
      development (3.8 acres)

      Undeveloped land adjacent to the              NTS/Fort Lauderdale, Ltd.
      Lakeshore Business Center
      development (2.4 acres)

      University Business Center Phase II           NTS-Properties V and NTS-
                                                    Properties Plus Ltd.

The term of the Joint Venture shall continued until dissolved. Dissolution shall
occur upon, but not before, the first to occur of the following:

      (a)    the withdrawal, bankruptcy or dissolution of a Partner or the
             execution by a Partner of an assignment for the benefit of its
             creditors;

      (b)    the  sale,  condemnation  or  taking  by  eminent  domain of all or
             substantially  all  of  the  Real  Property  and  the  sale  and/or
             collection of any evidences of indebtedness  received in connection
             therewith;

      (c)    the vote or consent of each of the Partners to dissolve the
             Partnership; or

      (d)    December 31, 2030.

Each of the properties  were  contributed to the L/U II Joint Venture subject to
existing  indebtedness,  except for Lakeshore  Business Center Phase I which was
contributed to the joint venture free and clear of any mortgage  liens,  and all
such  indebtedness was assumed by the joint venture.  Mortgages were recorded on
Lakeshore Business Center Phase I in the amount of $5,500,000, and on University
Business  Center  Phase II in the  amount of  $3,000,000,  in favor of the banks
which held the  indebtedness on University  Business Center Phase II,  Lakeshore
Business  Center  Phase  II and the  undeveloped  tracts  of land  prior  to the
formation of the joint venture.  In addition to the above,  the Partnership also
contributed  $750,000 to the L/U II Joint Venture.  As a result of the valuation
of the  properties  contributed  to the L/U II Joint  Venture,  the  Partnership
obtained an 18% partnership interest in the joint venture.

The properties of the L/U II Joint Venture are  encumbered by mortgages  payable
to an insurance company as follows:

        Loan Balance
        at 12/31/96                         Encumbered Property
        -----------                         -------------------
        $5,924,638                   Lakeshore Business Center Phase II
        $5,678,802                   University Business Center Phase II
        $5,506,717                   Lakeshore Business Center Phase I


                                     - 21 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

Investment in Joint Ventures - Continued
----------------------------------------

The loans  recorded  as  liabilities  of the Joint  Venture.  The  Partnership's
proportionate  interest  in the  loans  at  December  31,  1996  was  $3,054,163
($1,057,548,  $1,013,666 and $982,949). The mortgages bear a fixed interest rate
of 8.125% and are due August 1, 2008.  Monthly principal payments are based upon
a 12-year amortization  schedule.  At maturity,  the loans will have been repaid
based on the current rate of amortization.

The Net Cash Flow for each calendar  quarter is  distributed  to the Partners in
accordance with their  respective  Percentage  Interest.  The term Net Cash Flow
means the excess,  if any, of (A) the sum of (i) the gross receipts of the Joint
Venture Properties for such period (including loan proceeds), other than capital
contributions, plus (ii) any funds released from previously established reserves
(referred  to in  clause  (B)(iv)  below),  over  (B) the  sum of (i)  all  cash
operating expenses paid by the Joint Venture during such period in the course of
business,  (ii)  capital  expenditures  paid in cash during such  period,  (iii)
payments  during such period on account of  amortization of the principal of any
debts or  liabilities  of the Joint  Venture and (iv)  reserves  for  contingent
liabilities  and future  expenses of the Joint  Venture,  as  established by the
Partners;  provided,  however,  that the amounts referred to in (B)(i), (ii) and
(iii) above shall only be taken into account to the extent not funded by capital
contributions  or  paid  out  of  previously  established  reserves.  Percentage
Interest  means that  percentage  which the capital  contributions  of a Partner
bears to the aggregate capital contributions of all the Partners.

Net income or net loss is  allocated  between the  partners in  accordance  with
their respective Percentage Interests. The Partnership's ownership share was 18%
at December 31, 1996.

The  Partnership  had no liability for funding losses of the joint venture as of
December 31, 1996.

Competition
-----------

The  Partnership's  properties are subject to competition  from similar types of
properties  (including,  in  certain  areas,  properties  owned  or  managed  by
affiliates of the General  Partner) in the  respective  vicinities in which they
are located. Such competition is generally for the retention of existing tenants
or  for  new  tenants  when  vacancies  occur.  The  Partnership  maintains  the
suitability  and  competitiveness  of its  properties  primarily on the basis of
effective  rents,  amenities  and service  provided to tenants.  Competition  is
expected to increase in the future as a result of the construction of additional
properties.  As of December 31, 1996, there are no properties under construction
in the respective  vicinities in which the properties are located,  however,  in
the vicinity of Golf Brook Apartments,  there are 150 apartments units currently
under  construction which are scheduled to be completed during the first quarter
of 1997.  At this time it is  unknown  the  effect  these new units will have on
occupancy at Golf Brook  Apartments.  The  Partnership  has not  commissioned  a
formal market analysis of competitive  conditions in any market in which it owns
properties,  but relies upon the market condition  knowledge of the employees of
NTS Development Company who manage and supervise leasing for each property.

Management of Properties
------------------------

NTS Development Company, an affiliate of NTS-Properties Associates IV, the
general partner of the Partnership, directs the management of the
Partnership's properties pursuant to a written agreement.  NTS Development
Company is a wholly-owned subsidiary of NTS Corporation.  Mr. J. D. Nichols

                                     - 22 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

Management of Properties - Continued
------------------------------------

has a  controlling  interest  in NTS  Corporation  and is a general  partner  of
NTS-Properties   Associates  IV.  Under  the  agreement,  the  Property  Manager
establishes  rental  policies  and rates and directs the  marketing  activity of
leasing  personnel.  It also coordinates the purchase of equipment and supplies,
maintenance activity and the selection of all vendors, suppliers and independent
contractors.  As compensation for its services,  the Property Manager received a
total of $204,165 for the year ended  December  31, 1996.  $136,926 was received
from commercial properties and $67,239 was received from residential properties.
The fee is equal to 6% of gross  revenues from  commercial  properties and 5% of
gross revenues from residential properties.

In addition,  the management  agreement requires the Partnership to purchase all
insurance relating to the managed  properties,  to pay the direct  out-of-pocket
expenses  of the  Property  Manager  in  connection  with the  operation  of the
properties,  including the cost of goods and materials used for and on behalf of
the  Partnership,  and to  reimburse  the  Property  Manager  for the  salaries,
commissions,  fringe  benefits,  and  related  employment  expenses  of  on-site
personnel.

The term of the Management  Agreement  between NTS  Development  Company and the
Partnership was initially for five years, and thereafter for succeeding one-year
periods,  unless  cancelled.  The Agreement is subject to cancellation by either
party upon sixty days written  notice.  As of December 31, 1996,  the Management
Agreement is still in effect.

Conflict of Interest
--------------------

Because the  principals of the general  partner and/or its affiliates own and/or
operate real estate  properties  other than those owned by the Partnership  that
are or could be in  competition  with the  Partnership,  potential  conflicts of
interest exist.  Because the Partnership was organized by and is operated by the
General  Partner,   these  conflicts  are  not  resolved   through   arms-length
negotiations  but through the exercise of the General  Partner's  good  judgment
consistent  with its fiduciary  responsibility  to the Limited  Partners and the
Partnership's  investment  objectives  and  policies.  The  General  Partner  is
accountable  to the  Limited  Partners  as a  fiduciary  and  consequently  must
exercise  good faith and  integrity in handling  the  Partnership's  affairs.  A
provision has been made in the  Partnership  Agreement that the General  Partner
will not be liable to the Partnership except for acts or omissions  performed or
omitted  fraudulently,  in bad  faith  or  with  negligence.  In  addition,  the
Partnership  Agreement  provides for  indemnification  by the Partnership of the
General Partner for liability resulting from errors in judgement or certain acts
or  omissions.  The General  Partner and its  affiliates  retain a free right to
compete  with the  Partnership's  properties  including  the  right  to  develop
competing  properties  now and in the  future  in  addition  to  those  existing
properties  which may compete directly or indirectly.  NTS Development  Company,
the Property Manager and an affiliate of the General Partner,  acts in a similar
capacity for other affiliated  entities in the same geographic  region where the
Partnership has property  interests.  The agreement with the Property Manager is
on terms no less favorable to the Partnership than those which could be obtained
from a third party for similar services in the same geographical region in which
the properties  are located.  The contract is terminable by either party without
penalty upon 60 days written notice.

There are no other  agreements or  relationships  between the  Partnership,  the
General Partner and its affiliates than that previously described.




                                     - 23 -

<PAGE>



Items 1. and 2. Business and Properties - Continued

Employees
---------

The  Partnership  has no  employees;  however,  employees of an affiliate of the
general  partner are  available  to perform  services for the  Partnership.  The
Partnership  reimburses  this  affiliate for the actual costs of providing  such
services.

Item 3.  Legal Proceedings

None.

Item 4.  Submission of Matters to a Vote of Security Holders

None.

                                     - 24 -

<PAGE>



                                     PART II

Item 5.        Market for Registrant's Limited Partnership Interests and Related
               Partner Matters

There is no established  trading market for the limited  partnership  interests.
The  Partnership  had 2,481  limited  partners as of  February  27,  1997.  Cash
distributions  and  allocations of income and loss are made as described in Note
1C to the Partnership's 1995 financial statements.

Annual  distributions  totalling  $8.00 (1996),  $37.00 (1995) and $11.58 (1994)
were paid per limited  partnership  unit. 1995  distributions  include a $25 per
unit  special  distribution  from the  Partnership's  cash  reserves.  Quarterly
distributions  are determined  based on current cash  balances,  cash flow being
generated by operations and cash reserves  needed,  as determined by the general
partner, for future leasing costs, tenant finish costs and capital improvements.
Distributions were paid quarterly as follows:


                                  1996               1995              1994
                               ----------         ----------         --------
First quarter                    $ 3.00             $28.00            $ 2.86
Second quarter                     3.00               3.00              2.86
Third quarter                      2.00               3.00              2.86
Fourth quarter                     --                 3.00              3.00
                                 ------             ------            ------

                                 $ 8.00             $37.00            $11.58
                                 ======             ======            ======

The table below  presents  that portion of the  distributions  that  represent a
return of capital on a Generally  Accepted  Accounting  Principle  basis for the
years ended December 31, 1996, 1995 and 1994.


                                                  Cash
                          Net Loss            Distributions         Return of
                         Allocated               Declared            Capital
                         ---------               --------            -------

Limited Partners:
       1996              $ (45,719)             $  222,842         $  222,842
       1995               (422,220)              1,100,565          1,100,565
       1994               (303,153)                344,447            344,447

General Partner:
       1996              $    (462)             $    2,251         $    2,251
       1995                 (4,265)                 11,117             11,117
       1994                 (3,062)                  3,479              3,479



                                     - 25 -

<PAGE>


<TABLE>

Item 6.  Selected Financial Data

Years ended December 31, 1996, 1995, 1994, 1993 and 1992.
<CAPTION>


                                             1996            1995            1994            1993            1992
                                         ------------    ------------    ------------    ------------    ------------

<S>                                      <C>             <C>             <C>             <C>             <C>
Rental and other income                  $  3,577,554    $  3,285,430    $  2,595,299    $  2,184,317    $  2,302,901
Total expenses                             (3,623,735)     (3,711,915)     (2,901,514)     (2,448,865)     (2,274,943)
                                         ------------    ------------    ------------    ------------    ------------

Net income (loss)                        $    (46,181)   $   (426,485)   $   (306,215)   $   (264,548)   $     27,958
                                         ============    ============    ============    ============    ============

Net income (loss) allocated to:
 General partner                         $       (462)   $     (4,265)   $     (3,062)   $     (2,645)   $        280
 Limited partners                        $    (45,719)   $   (422,220)   $   (303,153)   $   (261,903)   $     27,678

Net income (loss) per
limited partnership unit                 $      (1.63)   $     (14.19)   $     (10.19)   $      (8.80)   $        .93

Weighted average number
 of limited partnership
 units                                         28,012          29,745          29,745          29,745          29,745

Cumulative net income
 (loss) allocated to:
  General partner                        $      3,406    $      3,868    $      8,133    $     11,195    $     13,840
  Limited partners                       $    337,100    $    382,819    $    805,039    $  1,108,192    $  1,370,095

Cumulative taxable income
 (loss) allocated to:
  General partner                        $    (24,618)   $    (24,486)   $    (20,830)   $    (14,278)   $     (9,650)
  Limited partners                       $ (2,437,521)   $ (2,424,353)   $ (2,062,388)   $ (1,413,707)   $   (955,538)

Distributions declared:
 General partner                         $      2,251    $     11,117    $      3,479    $      3,438    $      5,163
 Limited partners                        $    222,842    $  1,100,565    $    344,447    $    340,282    $    511,175

Cumulative distributions
 declared to:
  General partner                        $    218,253    $    216,002    $    204,885    $    201,406    $    197,968
  Limited partners                       $ 21,607,636    $ 21,384,794    $ 20,284,229    $ 19,939,782    $ 19,599,500

At year end:
Land, buildings and
 amenities, net                          $ 13,801,251    $ 14,617,818    $ 11,974,200    $  9,808,367    $ 10,251,046

Total assets                             $ 15,406,286    $ 16,645,788    $ 15,483,541    $ 15,242,567    $ 11,537,027

Mortgages and notes
 payable                                 $ 11,236,625    $ 11,592,641    $  8,895,313    $  8,132,325    $  3,883,000

</TABLE>

The  above  selected  financial  data  should  be read in  conjunction  with the
financial  statements  and related notes  appearing  elsewhere in this Form 10-K
report.


                                     - 26 -

<PAGE>



Item 7.      Management's Discussion and Analysis of Financial Condition and
             Results of Operations

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


The occupancy levels at the  Partnership's  properties as of December 31 were as
follows:


                                     Percentage
                                    Ownership at
                                       12/31/96     1996      1995       1994
                                       --------     ----      ----       ----

Wholly-Owned Properties
-----------------------
Commonwealth Business Center             100%        86%       86%        82%
Phase I

Plainview Point Office Center            100%        88%       85%        74%
Phases I and II

The Willows of Plainview Phase I         100%        89%       91%        87%

Properties Owned in Joint Venture
with NTS-Properties V
---------------------
The Willows of Plainview Phase II         10%        92%       94%        93%

Lakeshore Business Center Phase I                              See
(See L/U II Joint Venture below)          N/A       N/A       below       80%
                                                               (2)
Properties Owned in Joint Venture
with NTS-Properties VI
----------------------
Golf Brook Apartments                      4%        97%       91%        93%

Plainview Point III Office Center          5%        91%       91%        91%

Property Owned in Joint Venture
with NTS-Properties VII, Ltd. and
NTS-Properties Plus Ltd.
------------------------
Blankenbaker Business Center 1A           30%       100%      100%       100%
                                                                         (1)
Properties Owned Through
Lakeshore/University II Joint
Venture (L/U II Joint Venture)
------------------------------
Lakeshore Business Center Phase I         18%        92%       92%       See
                                                                        above
                                                                         (2)

Lakeshore Business Center Phase II        18%        89%       72%        78%
                                                                         (3)

University Business Center                18%        99%       95%       100%
Phase II                                                                 (3)

(1)    The  Partnership  acquired an interest in this property  during the third
       quarter  of 1994.  See  below for a  discussion  regarding  this  capital
       contribution.
(2)    During the first quarter of 1995, the Partnership's ownership interest in
       Lakeshore  Business  Center  Phase I changed.  See below for a discussion
       regarding this change.
(3)    As of December 31, 1994, the Partnership did not have an interest in this
       property.  See below for a discussion regarding the change which occurred
       during the first quarter of 1995.

                                     - 27 -

<PAGE>



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

The rental and other income  generated by the  Partnership's  properties for the
years ended December 31, 1996, 1995 and 1994 were as follows:


                              Percentage
                               Ownership
                              at 12/31/96       1996        1995       1994
                              -----------       ----        ----       ----


Wholly-Owned Properties
-----------------------
Commonwealth Business
Center Phase I                     100%     $  684,996  $  618,041  $  565,572

Plainview Point Office
Center Phases I and II             100%     $  544,023  $  462,855  $  324,433

The Willows of Plainview
Phase I                            100%     $1,108,767  $1,043,360  $1,060,995

Properties Owned in Joint
Venture with NTS-
Properties V
------------
The Willows of Plainview
Phase II                            10%     $  123,547  $  115,380  $  118,399

Lakeshore Business Center
Phase I                             N/A            N/A  $   14,282  $  163,127
                                                               (1)
Properties Owned in Joint
Venture with NTS-
Properties VI
-------------
Golf Brook Apartments                4%     $  115,828  $  112,549  $  108,795

Plainview Point III
Office Center                        5%     $   38,079  $   22,351  $   35,080

Property Owned in Joint
Venture with NTS-
Properties VII, Ltd. And
NTS-Properties Plus Ltd.
------------------------
Blankenbaker Business
Center 1A                           30%     $  277,578  $  275,378  $   87,253
                                                                           (2)

                              (Continued next page)

Revenues shown in the table above and on page 28 for properties  owned through a
joint venture  represent  only the  Partnership's  percentage  interest in those
revenues.

(1)    During the first quarter of 1995, the Partnership's ownership interest in
       Lakeshore   Business   Center   Phase  I   changed.   The   Partnership's
       proportionate  share of rental and other  income from January 23, 1995 to
       December  31,  1995  is  reflected  below.  See  below  for a  discussion
       regarding this change.
(2)    The  Partnership  acquired an interest in this property  during the third
       quarter  of 1994.  See  below for a  discussion  regarding  this  capital
       contribution.


                                     - 28 -

<PAGE>



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


                                Percentage
                                 Ownership
                               at 12/31/96       1996       1995       1994
                               -----------     --------   --------    ------

Properties Owned through
Lakeshore/University II
Joint Venture (L/U II
Joint Venture)
--------------
Lakeshore Business Center
Phase I                            18%       $  237,375  $  191,785    N/A (1)

Lakeshore Business Center
Phase II                           18%       $  207,357  $  192,167    N/A (2)

University Business
Center Phase II                    18%       $  215,922  $  198,064    N/A (2)

(1)    During the first quarter of 1995, the Partnership's ownership interest in
       Lakeshore  Business Center Phase I changed.  Rental and other income from
       January 1, 1995 to January 22, 1995 and for 1994 is reflected on page 27.
       See below for a discussion regarding this change.
(2)    During 1994, the  Partnership  did not have an interest in this property.
       See below for a discussion regarding the change which occurred during the
       first quarter of 1995.

Year-ending  occupancy at Commonwealth Business Center Phase I remained constant
(86%)  from 1995 to 1996.  During  1996,  there was one new lease for a total of
3,600  square feet and an  expansion  of  approximately  1,600 square feet by an
existing  tenant.  Offsetting the new lease and expansion is one tenant move-out
at the end of the  lease  term  of  approximately  5,500  square  feet.  Average
occupancy  increased from 81% in 1995 to 91% in 1996. Rental and other income at
Commonwealth  Business Center Phase I increased from 1995 to 1996 as a result of
the  increase  in average  occupancy  and an  increase  in common  area  expense
reimbursements.  Tenants at  Commonwealth  Business Center Phase I reimburse the
Partnership for common area expenses as part of the lease agreements.

The 4% increase in year-ending occupancy at Commonwealth Business Center Phase I
from 1994 to 1995 is  attributed  to three new  leases  totalling  approximately
6,000 square feet.  Partially offsetting the new leases are two tenant move-outs
at the end of the lease terms totalling  approximately 2,300 square feet and one
tenant,  who had occupied 1,600 square feet,  vacating the premises prior to the
end of the lease term due to bankruptcy.  There was no accrued income  connected
with this lease.  Average  occupancy  increased from 75% in 1994 to 81% in 1995.
Rental and other income at  Commonwealth  Business Center Phase I increased from
1994 to 1995 as a result of the increase in average occupancy and an increase in
common area expense reimbursements.  Partially offsetting the increase in rental
and other income is an increase in the provision for doubtful accounts.

The 3% increase in year-ending occupancy at Plainview Point Office Center Phases
I and II from  1995 to  1996  can be  attributed  to two  new  leases  totalling
approximately  1,700  square  feet.  Included in this total is an  expansion  of
approximately  1,000  square  feet by an existing  tenant.  There were no tenant
move-outs during 1996. Average occupancy at Plainview Point Office Center Phases
I and II has increased from 77% in 1995 to 86% in 1996.  Rental and other income
at Plainview  Point Office  Center Phases I and II increased in 1996 as compared
to 1995 as a result of the  increase  in average  occupancy  and an  increase in
rental rates.


                                     - 29 -

<PAGE>



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

The 11%  increase in  year-ending  occupancy at  Plainview  Point Office  Center
Phases I and II from 1994 to 1995 is  attributed  to three new leases  totalling
approximately  6,100  square  feet.  Included in this total is an  expansion  of
approximately  1,000  square  feet by an existing  tenant.  There were no tenant
move-outs during 1995.  Average  occupancy  increased from 57% in 1994 to 77% in
1995.  Rental and other income at Plainview  Point Office Center Phases I and II
increased  in 1995 as  compared  to 1994 as a result of the  increase in average
occupancy and as a result of increased rental rates on lease renewals.

Year-ending  occupancy  at The Willows of Plainview  Phase I decreased  from 91%
(1995) to 89% (1996).  However,  average  occupancy  from 1995 to 1996 increased
from 87% to 89%, respectively.  Occupancy at residential properties fluctuate on
a continuous basis.  Year-ending  occupancy percentages represent occupancy only
on a  specific  date;  therefore,  it is more  meaningful  to  consider  average
occupancy  percentages which are representative of the entire year's results. In
the  opinion  of  the  General  Partner  of the  Partnership,  the  decrease  in
year-ending occupancy from 1995 to 1996 is only a temporary fluctuation and does
not  represent  a downward  occupancy  trend.  The  increase in rental and other
income at The Willows of Plainview  Phase I from 1995 to 1996 is a result of the
increase  in average  occupancy,  increased  fees  collected  upon  early  lease
terminations and an increase in rental rates.

Year-ending occupancy at The Willows of Plainview Phase I increased 4% from 1994
to 1995. However, average occupancy from 1994 to 1995 decreased from 92% to 87%,
respectively.  Rental  and other  income at The  Willows  of  Plainview  Phase I
decreased from 1994 to 1995 as a result of the decrease in average occupancy.

The Willows of Plainview  Phase II's  year-ending  occupancy  decreased from 94%
(1995) to 92% (1996).  Average  occupancy at The Willows of  Plainview  Phase II
increased  3% from 92%  (1995) to 95%  (1996).  In the  opinion  of the  General
Partner of the Partnership,  the decrease in year-ending  occupancy from 1995 to
1996 is only a temporary fluctuation and does not represent a downward occupancy
trend.  The increase in rental and other income from 1995 to 1996 is a result of
the 3%  increase  in  average  occupancy,  an  increase  in rental  rates and an
increase  in income  from  fully-furnished  units.  Fully-  furnished  units are
apartments which rent at an additional premium above base rent.

The Willows of Plainview  Phase II's  year-ending  occupancy  increased from 93%
(1994) to 94% (1995);  however,  average  occupancy  from 1994 to 1995 decreased
from 94% to 92%, respectively. This decrease in average occupancy at The Willows
of Plainview Phase II resulted in a decrease in rental and other income.

Golf Brook  Apartments'  year-ending  occupancy  increased  6% from 1995 to 1996
while average occupancy remained constant at 94% in 1995 and 1996. The change in
rental  and other  income  at Golf  Brook  Apartments  from 1995 to 1996 was not
significant.

Golf Brook  Apartments'  year-ending  occupancy  decreased  2% from 1994 to 1995
while average  occupancy  remained  constant at 94% in 1994 and 1995. Rental and
other income at Golf Brook Apartments increased from 1994 to 1995 as a result of
increased rental rates,  decreased rental  concessions and increased  charges to
applicants for credit checks.

Year-ending  occupancy percentages at Plainview Point III Office Center remained
constant  (91%) from 1995 to 1996.  Two tenants  expanded  existing  space for a
total of  approximately  2,500 square feet and one tenant occupying 2,500 square
feet vacated at the end of the lease term. Average

                                     - 30 -

<PAGE>



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

occupancy  increased  from 55% (1995) to 93%  (1996).  Rental  and other  income
increased at Plainview  Point III Office Center from 1995 to 1996 as a result of
the increase in average occupancy.

Year-ending  occupancy at Plainview Point III Office Center was 91% for 1995 and
1994 as a result of the  following new leases and tenant  move-outs.  New leases
during 1995  consist of a 10,343  square  foot  63-month  lease (took  occupancy
September  1, 1995) and a 16,727  square foot  five-year  lease (took  occupancy
December  27,  1995).  The leases are offset by two tenant  move-outs  totalling
approximately 26,000 square feet. Of this total, 16,400 square feet represents a
tenant who  vacated  the  office  center at the end of the lease term due to the
company's  decision to  consolidate  its Louisville  processing  center with one
located in another city. The tenant occupied 27% of the office center's rentable
area. Approximately 9,600 square feet of the total move-outs represents a tenant
who  vacated  the  premises  January  31,  1995.  The  tenant's  lease  was on a
month-to-month  basis at the time of move- out. The tenant's original lease term
was for a period of four years.  The tenant  occupied  approximately  16% of the
office center's rentable area.  Average  occupancy  decreased from 92% (1994) to
55% (1995).  Rental and other income  decreased  at  Plainview  Point III Office
Center from 1995 to 1994 as a result of the decrease in average occupancy during
1995.

A  wholly-owned  subsidiary  of The  Prudential  Insurance  Company  of  America
(Prudential  Service  Bureau,  Inc.) has leased  100% of  Blankenbaker  Business
Center 1A. During 1994,  Prudential Service Bureau,  Inc. signed a lease renewal
and expansion.  The renewal  extended the current lease through July 2005.  With
the expansion,  the tenant occupied 100% of the business center during the third
quarter of 1994.  In  addition  to monthly  rent  payments,  Prudential  Service
Bureau,  Inc. is obligated to pay  substantially  all of the operating  expenses
attributable to its space. The change in rental and other income at Blankenbaker
Business Center 1A from 1995 to 1996 was not significant.

Year-ending  occupancy at Lakeshore  Business  Center Phase I remained  constant
(92%) from 1995 to 1996. Six new leases  totalling  approximately  10,600 square
feet,  including  approximately  3,400 square feet in  expansions by two current
tenants,  are offset by five tenant  move-outs  totalling  approximately  10,000
square  feet.  The five  move-outs  consist of two tenants  (2,700  square feet)
vacating at the end of the lease term, one tenant (1,600 square feet) exercising
a termination  option,  and two tenants  vacating  prior to the end of the lease
term - one due to a business decision to consolidate its office space at another
location  (700 square feet - tenant paid rent  through end of lease) and one due
to bankruptcy (5,000 square feet - tenant ceased rental payments). The write-off
of accrued  income  connected  with these  leases was not  significant.  Average
occupancy at Lakeshore Business Center Phase I increased 13% from 84% in 1995 to
97% in 1996.  Rental and other income increased from 1995 to 1996 as a result of
the increase in average occupancy.

As of December 31, 1996, Lakeshore Business Center Phase I had 1,800 square feet
of additional  space leased to a current  tenant.  The tenant took  occupancy in
January 1997.  Subsequent to December 31, 1996, one new lease for  approximately
1,100 square feet and an  expansion  lease for  approximately  2,000 square feet
were signed at Lakeshore  Business Center Phase I. The new tenant took occupancy
during the first quarter of 1997 and the expansion lease is effective during the
second quarter of 1997. With the new leases and expansion, the business center's
occupancy  should improve to 97% during the second quarter of 1997. There are no
material  commitments  relating to the new leases. See the Liquidity and Capital
Resources section of this item for the tenant finish commitment  relating to the
expansion lease.



                                     - 31 -

<PAGE>



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

The 12% increase in year-ending  occupancy at Lakeshore  Business Center Phase I
from 1994 to 1995 can be  attributed  to 11 new leases  totalling  approximately
19,000 square feet, which includes approximately 6,400 square feet in expansions
by two current  tenants.  The new leases and expansions are partially  offset by
four  tenant  move-outs,  who vacated at the end of the lease  terms,  totalling
approximately  6,100 square feet. Average occupancy increased from 70% (1994) to
84%  (1995).  Rental  and other  income at  Lakeshore  Business  Center  Phase I
increased  from 1994 to 1995  primarily  as a result of the  increase in average
occupancy and an increase in common area expense reimbursements. The increase in
rental and other income can also be  attributed to the  Partnership's  increased
ownership  in  Lakeshore  Business  Center  Phase I. (See below for a discussion
regarding  the change).  Partially  offsetting  the increase in rental and other
income at  Lakeshore  Business  Center I is an  increase  in the  provision  for
doubtful accounts.

The 17% increase in year-ending  occupancy at Lakeshore Business Center Phase II
from 72%  (1995) to 89% (1996) can be  attributed  to five new leases  totalling
approximately 19,200 square feet which includes approximately 10,900 square feet
in expansions by three current tenants. One tenant, Lambda Physik,  accounts for
nearly  11,000  square  feet of the total new leases and has become the  largest
tenant  in the  building  occupying  approximately  11% of  the  total  building
rentable square feet.  Partially offsetting the new leases and expansions is one
tenant  move-out,  totalling  2,800 square feet vacating prior to the end of the
lease term but  continuing to pay rent through the end of the lease term (August
1997).  Average  occupancy at Lakeshore  Business Center Phase II increased from
76% (1995) to 80% (1996). Overall, rental and other income at Lakeshore Business
Center Phase II remained fairly constant from 1995 to 1996 despite a 4% increase
in average  occupancy.  This is primarily a result of a decrease in rental rates
on lease renewals.  As discussed in prior filings,  prior to the Ft.  Lauderdale
area  experiencing  an economic  downturn,  the  property  was able to negotiate
higher net effective rental rates than current market rental rates. As a result,
the  leases  that  were  renewed  at the end of 1995 and the  beginning  of 1996
renewed at a lower net effective  rental rate. The  Partnership's  proportionate
share of the rental and other income at Lakeshore  Business  Center II, however,
increased  in  1996 as  compared  to  1995.  This is due to the  fact  that  the
Partnership  acquired an interest in  Lakeshore  Business  Center  Phase II as a
result of the formation of the Lakeshore/University  Joint Venture (L/U II Joint
Venture) on January 23, 1995.  (See below for a discussion  regarding  the Joint
Venture.)

Subsequent  to  December  31,  1996  Lakeshore  Business  Center  Phase  II  had
approximately  5,100 square feet of additional  space leased to two new tenants.
The  tenants  took  occupancy  during the first  quarter  of 1997.  With the new
leases,  the  business  center's  occupancy  has  improved to 94%.  There are no
material tenant finish commitments relating to the new leases.

The 6% decrease in year-ending  occupancy at Lakeshore  Business Center Phase II
from  1994  to  1995  can be  attributed  to  four  tenant  move-outs  totalling
approximately  9,600  square feet and a  downsizing  by a current  tenant of its
existing  space  of  approximately  6,000  square  feet.  Two of the  move-outs,
totalling  approximately  5,800 square feet,  represent  tenants who vacated the
premises  at the  end  of  the  lease  term.  The  third  tenant,  who  occupied
approximately  1,400 square feet,  vacated the premises and ceased making rental
payments  in breach  of the lease  terms due to  bankruptcy.  The  write-off  of
accrued income connected with this lease was not significant. The fourth tenant,
who occupied  approximately 2,400 square feet, vacated the premises prior to the
end of the lease term but is continuing to pay rent through the end of the lease
term (September  1996).  Partially  offsetting the tenant  move-outs are six new
leases for a total of  approximately  9,700  square feet.  Average  occupancy at
Lakeshore Business Center Phase II decreased from 78% (1994) to 76% (1995).

                                     - 32 -

<PAGE>



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

Philip Crosby Associates, Inc. ("Crosby") has leased 100% of University Business
Center Phase II. The original lease term is for seven years, and the tenant took
occupancy April 1991. As a result of Crosby downsizing and sub-leasing a portion
of its leased space, occupancy has decreased to 99% at December 31, 1996 and 95%
at  December  31,  1995.  See below for a further  discussion  of Crosby and its
leased space.

The  Partnership's  proportionate  share  of the  rental  and  other  income  at
University  Business Center Phase II increased from 1995 to 1996. This is due to
the fact that the Partnership acquired an interest in University Business Center
Phase II as a result of the formation of the L/U II Joint Venture on January 23,
1995.  (See below for a discussion of the Joint  Venture).  Overall,  rental and
other income at University  Business Center Phase II remained fairly constant in
1996 as compared to 1995.

In cases of tenants who cease making rental  payments or abandon the premises in
breach of their lease,  the Partnership  pursues  collection  through the use of
collection agencies or other remedies available by law when practical.  In cases
where tenants have vacated as a result of bankruptcy,  the Partnership has taken
legal  action when it has thought  there could be a possible  collection.  There
have been no funds  recovered as a result of these actions during 1996,  1995 or
1994.

Current  occupancy  levels are considered  adequate to continue the operation of
the Partnership's properties. See the Liquidity and Capital Resources section of
this item for a discussion regarding the Partnership's debt financing.

Interest  and  other  income  includes  income  from  investments  made  by  the
Partnership with cash reserves. Interest and other income decreased from 1995 to
1996 as a result of a decrease in cash reserves available for investment.

The increase in  operating  expenses  from 1995 to 1996 is due  partially to the
Partnership  acquiring  an interest in the L/U II Joint  Venture in January 1995
(see  discussion  below).  The  increase  in  operating  expenses is also due to
increased  utility  costs,  increased  general  building  maintenance  costs and
increased legal expenses at the Partnership's commercial properties.  There were
no  significant   fluctuations  in  operating   expenses  at  the  Partnership's
residential properties.

Operating expenses-affiliated decreased in 1996 as compared to 1995 primarily as
a result of decreased  leasing and property  management costs at Plainview Point
Office  Center  Phases  I and  II,  Commonwealth  Business  Center  Phase  I and
Blankenbaker  Business Center 1A. Partially offsetting the decrease in operating
expenses -affiliated is the Partnership's  acquisition of an interest in the L/U
II  Joint  Venture  in  January  1995  (see  discussion  below).  There  were no
significant  fluctuations in operating expenses- affiliated at the Partnership's
residential    properties    in   1996   as   compared   to   1995.    Operating
expenses-affiliated  are  expenses  for  services  performed by employees of NTS
Development Company, an affiliate of the General Partner of the Partnership.

Both the 1996 and 1995 write-off of  unamortized  building  improvements  can be
attributed to Plainview  Point Office Center Phases I and II. The 1996 write-off
is the result of an exterior  stair  replacement  and represents the cost of the
stairs  which  were  replaced  that had not  been  fully  depreciated.  The 1995
write-off is the result of lobby renovations and represents the cost of previous
renovations that had not been fully depreciated.

The 1996  write-off of  unamortized  loan costs relate to loan costs  associated
with the Lakeshore/University II Joint Venture's notes payable. The

                                     - 33 -

<PAGE>



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

unamortized loan costs were expensed due to the fact that the notes were retired
in 1996 prior to their  maturity  (January  31,  1998).  See the  Liquidity  and
Capital Resources section of this item for further discussion.

The decrease in amortization  of capitalized  leasing costs from 1995 to 1996 is
due  primarily to costs  capitalized  during the initial  lease-up at University
Business Center Phase II becoming fully amortized in 1995.

The decrease in interest expense in 1996 as compared to 1995 is due primarily to
continued  principal  payments  on  the  mortgages  and  notes  payable  of  the
Partnership and its joint venture  properties.  The decrease in interest expense
can also be  attributed  to a lower  interest  rate on the  permanent  financing
obtained by the L/U II Joint  Venture on July 23, 1996.  See the  Liquidity  and
Capital  Resources  section of this item for details regarding the Partnership's
debt.

Management  fees are  calculated as a percentage of cash  collections;  however,
revenue for reporting  purposes is recorded on the accrual  basis.  As a result,
the  fluctuations of revenues between years will differ from the fluctuations of
management  fee  expense.  The  increase  in  management  fee expense in 1996 as
compared to 1995 is also attributed to the Partnership  acquiring an interest in
the L/U II Joint Venture in January 1995 (discussed below).

The  increase in real  estate  taxes from 1995 to 1996 is  primarily  due to the
Partnership  acquiring  an interest in the L/U II Joint  Venture in January 1995
(discussed below).  There were no significant  fluctuations at the Partnership's
other properties.

The decrease in professional  and  administrative  expenses from 1995 to 1996 is
due  mainly to a  decrease  in  outside  legal  fees and  litigation  settlement
expenses. The litigation originally instituted by an investor in the Partnership
against her  investment  advisor and  involving  claims  between the  investment
advisor and the  Partnership,  its general  partner  and NTS-  Properties  V, an
affiliate of the general partner of the Partnership, and its general partner was
settled during 1995. At a settlement conference before the Court (U.S.D.C., S.D.
NY), the parties agreed on a confidential  basis to settle the  litigation,  and
any and all other  claims of the Third-  Party  Plaintiffs  in exchange  for the
payment by the Partnership and NTS- Properties V of certain monies,  without the
admission of fault or wrong doing.

The increase in professional and administrative expenses-affiliated from 1995 to
1996 is due mainly to increased salary costs.  Professional  and  administrative
expenses-affiliated  are  expenses  for  services  performed by employees of NTS
Development Company, an affiliate of the general partner.

The change in depreciation  and  amortization  expense from 1995 to 1996 was not
significant.   Depreciation  is  computed  using  the  straight-line  method  of
depreciation  over the estimated useful lives of the assets which are 5-30 years
for  land  improvements,  30  years  for  buildings,  5-30  years  for  building
improvements   and  5-30  years  for  amenities.   The  aggregate  cost  of  the
Partnership's properties for Federal tax purposes is approximately $24,700,000.

As  previously  disclosed  in the  Partnership's  Form  10-K for the year  ended
December  31,  1995,  on August 16,  1994,  Blankenbaker  Business  Center Joint
Venture,  a joint venture between  NTS-Properties  VII, Ltd. and  NTS-Properties
Plus Ltd.,  affiliates of the general  partner of the  Partnership,  amended its
joint  venture  agreement  to admit the  Partnership  to the Joint  Venture.  In
accordance  with  the  Joint  Venture  Agreement   Amendment,   the  Partnership
contributed $1,100,000 and NTS-Properties VII, Ltd. contributed $500,000.

                                     - 34 -

<PAGE>



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

As a result of its capital contribution, the Partnership obtained a 30% interest
in the Joint Venture.  NTS-Properties  Plus Ltd.'s interest in the Joint Venture
decreased  from  69% to 39% as a result  of the  capital  contributions  made by
NTS-Properties  VII,  Ltd. and the  Partnership.  NTS-  Properties  VII,  Ltd.'s
interest in the Joint Venture remained at 31%.

As  previously  discussed  in the  Partnership's  Form  10-K for the year  ended
December  31,  1995,  on  January  23,  1995,  a  new  joint  venture  known  as
Lakeshore/University  II Joint  Venture (L/U II Joint  Venture) was formed among
the  Partnership and  NTS-Properties  V,  NTS-Properties  Plus Ltd. and NTS/Fort
Lauderdale,  Ltd.,  affiliates of the general  partner of the  Partnership,  for
purposes  of  owning  Lakeshore  Business  Center  Phases  I and II,  University
Business Center Phase II and certain  undeveloped tracts of land adjacent to the
Lakeshore Business Center development.

The table below identifies which properties were contributed to the L/U II Joint
Venture and the respective  owners of such properties  prior to the formation of
the joint venture.

               Property                        Contributing Owner
               --------                        ------------------

Lakeshore Business Center Phase I          NTS-Properties IV and NTS-
                                           Properties V

Lakeshore Business Center Phase II         NTS-Properties Plus Ltd.

Undeveloped land adjacent to the           NTS-Properties Plus Ltd.
Lakeshore Business Center
development (3.8 acres)

Undeveloped land adjacent to the           NTS/Fort Lauderdale, Ltd.
Lakeshore Business Center
development (2.4 acres)

University Business Center                 NTS-Properties V and NTS-Properties
Phase II                                   Plus Ltd.


Each of the properties  were  contributed to the L/U II Joint Venture subject to
existing  indebtedness,  except for Lakeshore  Business Center Phase I which was
contributed to the joint venture free and clear of any mortgage  liens,  and all
such  indebtedness was assumed by the joint venture.  Mortgages were recorded on
Lakeshore Business Center Phase I in the amount of $5,500,000, and on University
Business  Center  Phase II in the  amount of  $3,000,000,  in favor of the banks
which held the  indebtedness on University  Business Center Phase II,  Lakeshore
Business  Center  Phase  II and the  undeveloped  tracts  of land  prior  to the
formation of the joint venture.  In addition to the above,  the Partnership also
contributed  $750,000 to the L/U II Joint Venture.  As a result of the valuation
of the  properties  contributed  to the L/U II Joint  Venture,  the  Partnership
obtained an 18% partnership interest in the joint venture.

The General Partner of the  Partnership  believes that the results of operations
for 1995 and 1994 are not comparable and, therefore,  a discussion comparing the
results  of  operations  is not  included  due to the fact that the  Partnership
acquired an interest in the Blankenbaker Business Center Joint Venture on August
16, 1994 as discussed  above.  Comparisons of the results of operations  between
1995 and 1994 are also difficult as a result of the Partnership's  investment in
the L/U II Joint Venture as discussed above.  These changes in the Partnership's
investments are permanent changes and will effect future results of operations.


                                     - 35 -

<PAGE>





Liquidity and Capital Resources
-------------------------------

Cash provided by (used in) operations was $936,169  (1996),  $815,327 (1995) and
$(27,511)  (1994).  These funds, in conjunction  with cash on hand, were used to
make a 1.05%  (annualized)  distribution of $225,093 (1996), a 4.8% (annualized)
distribution  of  $1,111,682  (1995),  and  1.5%  (annualized)  distribution  of
$347,926 (1994).  The distribution  made during the three months ended March 31,
1995 included a special $751,136  distribution made from the Partnership's  cash
reserves.   The   Partnership   does  not  anticipate   making  another  special
distribution in the near term. The annualized distribution rate is calculated as
a percent  of the  original  capital  contribution  less a return of  capital of
$235.64 per limited partnership unit made from the proceeds of the sale of Sabal
Club  Apartments  in 1988.  The limited  partners  received  99% and the general
partners received 1% of these distributions. No distribution was made during the
quarter ended December 31, 1996 due to uncertainties  involving the Crosby lease
as  discussed  below.  Distributions  will be resumed once the  Partnership  has
established adequate cash reserves and is generating cash from operations which,
in  management's  opinion,  is sufficient to warrant future  distributions.  The
primary source of future  liquidity and  distributions is expected to be derived
from cash generated by the Partnership's properties after adequate cash reserves
are  established  for future  leasing  costs,  tenant  finish  costs and capital
improvements.  Cash reserves  (which are  unrestricted  cash and equivalents and
investment securities as shown on the Partnership's balance sheet as of December
31) were $346,479,  $681,197 and $2,405,974 at December 31, 1996, 1995 and 1994,
respectively.

On July 23, 1996, the L/U II Joint Venture obtained three mortgage loans from an
insurance company totalling $17,400,000 ($6,025,000, $5,775,000 and $5,600,000).
The  outstanding  balances  of the loans at December  31, 1996 were  $5,924,638,
$5,678,802 and $5,506,717,  respectively.  The loans are recorded as a liability
of the Joint Venture. The Partnership's  proportionate  interest in the loans at
December 31, 1996 was  $1,057,548,  $1,013,666 and $982,949,  respectively.  The
mortgages  bear  interest at a fixed rate of 8.125%,  are due August 1, 2008 and
are secured by the assets of the Joint Venture.  Monthly principal  payments are
based upon a 12-year  amortization  schedule.  At maturity,  the loans will have
been repaid based on the current  rate of  amortization.  The proceeds  from the
loans were used to pay off the Joint  Venture's  notes payable of  approximately
$16.8  million  which  bore  interest  at a fixed rate of 10.6% and to fund loan
closing  costs  of  approximately  $280,000.  The  Partnership's   proportionate
interest in the notes which were paid off was  approximately  $3,000,000 or 18%.
The notes  which were paid off had a  maturity  date of January  31,  1998.  The
remaining proceeds will be used to fund Joint Venture tenant finish improvements
and leasing costs.

As of  December  31,  1996,  the  Partnership  has a  mortgage  payable  with an
insurance  company  in the amount of  $2,467,606.  The  mortgage  payable is due
October  1,  2004,  bears  interest  at a fixed  rate of 8.8% and is  secured by
Commonwealth  Business Center Phase I. Monthly principal payments are based upon
a 10-year amortization schedule. At maturity, the mortgage will have been repaid
based on the current rate of amortization.

As of December 31, 1996,  the  Partnership  had two mortgage  loans each with an
insurance  company in the amount of $2,012,389  and  $1,916,561.  Both mortgages
payable are due  December 5, 2003,  bear  interest at a fixed rate of 7% for the
first 60 months and are  secured by the land,  buildings  and  amenities  of The
Willows of Plainview  Phase I. At the end of the 56th month from the date of the
notes (notes dated November 23, 1993),  the insurance  companies will notify the
Partnership  of the interest rate which is their then  prevailing  interest rate
for loans with a term of five years on properties  comparable to the  apartments
(the "Modified Rate"). The

                                     - 36 -

<PAGE>



Liquidity and Capital Resources - Continued
-------------------------------------------

Partnership  will have 30 days to accept or reject  the  Modified  Rate.  If the
Modified  Rate is  rejected  by the  Partnership,  the entire  unpaid  principal
balance is due with the 60th installment of interest. If the Partnership accepts
the  Modified  Rate,  it becomes  effective  the 61st month from the date of the
note.  Current monthly principal payments on both notes are based upon a 27-year
amortization  schedule.  If the  Partnership  accepts  the  Modified  Rate,  the
remaining  principal balance of both mortgages will be amortized using a 22-year
amortization  schedule  beginning  the 61st month.  The  outstanding  balance at
maturity  based  on  the  current  rate  of  amortization  would  be  $3,367,108
($1,724,617 and $1,642,491).

As of December 31, 1996, The Willows of Plainview  Phase II, an apartment  joint
venture  between the Partnership  and  NTS-Properties  V, had two mortgage loans
each with an insurance  company in the amount of $3,220,975 and $1,922,970.  The
mortgages are recorded as a liability of the Joint  Venture.  The  Partnership's
proportionate  interest in the  mortgages  as of  December  31, 1996 is $523,139
($327,573 and $195,566).  Both mortgages are due December 5, 2003, bear interest
at a fixed  rate of 7.5% for the first 60 months  and are  secured  by the land,
buildings and amenities of the Joint Venture.  At the end of the 56th month from
the date of the notes (notes dated November 23, 1993),  the insurance  companies
will  notify  the  Joint  Venture  of the  interest  rate  which is  their  then
prevailing  interest  rate for  loans  with a term of five  years on  properties
comparable to the apartments (the "Modified Rate").  The Joint Venture will have
30 days to accept or reject the Modified  Rate. If the Modified Rate is rejected
by the Joint Venture,  the entire unpaid principal  balance is due with the 60th
installment  of interest.  If the Joint  Venture  accepts the Modified  Rate, it
becomes  effective  the 61st  month from the date of the note.  Current  monthly
principal payments on both notes are based upon a 27-year amortization schedule.
If the Partnership accepts the Modified Rate, the remaining principal balance of
both mortgages will be amortized using a 22-year amortization schedule beginning
the 61st month. The outstanding balance at maturity based on the current rate of
amortization would be $4,449,434 ($2,786,095 and $1,663,339).

As of December 31, 1996, the  Blankenbaker  Business  Center Joint Venture had a
mortgage  payable  with an insurance  company  (obtained  November  1994) in the
amount of  $4,198,030.  The  mortgage is  recorded  as a liability  of the Joint
Venture  and is secured by the assets of the Joint  Venture.  The  Partnership's
proportionate  interest in the mortgage at December 31, 1996 is $1,262,767.  The
mortgage  bears  interest at a fixed rate of 8.5% and is due  November 15, 2005.
Currently  monthly  principal  payments  are based upon an 11-year  amortization
schedule.  At maturity,  the mortgage will have been repaid based on the current
rate of amortization.

The majority of the Partnership's cash flow is derived from operating activities
in 1996 and 1995 and from cash  reserves in 1994.  Cash flows used in  investing
activities are for tenant finish  improvements  and other capital  additions and
were funded by operating activities or cash reserves.  Changes to current tenant
finish  improvements are a typical part of any lease  negotiation.  Improvements
generally include a revision to the current floor plan to accommodate a tenant's
needs, new carpeting and paint and/or wallcovering. The extent and cost of these
improvements   are  determined  by  the  size  of  the  space  and  whether  the
improvements are for a new tenant or incurred  because of a lease renewal.  Cash
flows used in investing activities in 1995 also included cash which was escrowed
for capital  expenditures,  leasing  commissions and tenant  improvements at the
properties  owned by the L/U II Joint  Venture.  Cash  flows  used in  investing
activities  are also for the purchase of investment  securities.  As part of its
cash  management  activities,  the  Partnership  has purchased  Certificates  of
Deposit or securities issued by the U.S.  Government with initial  maturities of
greater than three months to improve the return on its cash reserves. The

                                     - 37 -

<PAGE>



Liquidity and Capital Resources - Continued
-------------------------------------------

Partnership held the securities until maturity. Cash flows provided by investing
activities  were the result of a release of the escrow funds discussed above and
from the  maturity  of  investment  securities.  Cash  flows  used in  financing
activities are for cash distributions, payment of loan costs, principal payments
on mortgages and notes payable,  repurchases of limited partnership Units and an
increase in funds  reserved by the  Partnership  for the  repurchase  of limited
partnership  Units.  Cash flows  provided by financing  activities  represent an
increase in mortgages payable.  The 1995 capital contribution to a joint venture
represents the  Partnership's  capital  contribution to the L/U II Joint Venture
net the  Partnership's  proportionate  interest in the joint  venture's  capital
contributions.  The 1994 capital  contribution to a joint venture represents the
Partnership's  capital  contribution to the  Blankenbaker  Business Center Joint
Venture net the Partnership's proportionate interest in the joint venture's 1994
third quarter capital contributions.  The Partnership utilizes the proportionate
consolidation   method  of  accounting   for  joint  venture   properties.   The
Partnership's  interest in the joint venture's  assets,  liabilities,  revenues,
expenses  and  cash  flows  are  combined  on  a  line-by-line  basis  with  the
Partnership's own assets,  liabilities,  revenues,  expenses and cash flows. The
Partnership does not expect any material changes in the mix and relative cost of
capital  resources  except for interest and principal  payments  required by the
debt  financings  obtained  by the L/U II Joint  Venture  on July 23,  1996 (see
discussion  above)  and  renovations  and  other  major  capital   expenditures,
including  tenant finish,  which may be required to be funded from cash reserves
if they exceed cash flow from operating activities.

The table below  presents  that portion of the  distributions  that  represent a
return of capital on a Generally  Accepted  Accounting  Principle  basis for the
years ended December 31, 1996, 1995 and 1994.

                                                     Cash             Return
                                  Net Loss       Distributions          of
                                  Allocated         Declared          Capital
                                  ---------         --------          -------

          Limited Partners:
                  1996           $  (45,719)      $  222,842        $  222,842
                  1995             (422,220)       1,100,565         1,100,565
                  1994             (303,153)         344,447           344,447

          General Partner:
                  1996           $     (462)      $    2,251        $    2,251
                  1995               (4,265)          11,117            11,117
                  1994               (3,062)           3,479             3,479



Philip Crosby Associates, Inc. ("Crosby") has leased 100% of University Business
Center Phase II. The original  lease term is for seven years and the tenant took
occupancy in April 1991.  During the years ended  December  31,  1994,  1995 and
1996, Crosby sub-leased a portion of the business center. Currently,  Crosby has
sub-leased,  through the end of their lease term,  approximately  81,000  square
feet  (including  approximately  10,000  square  feet  of  mezzanine  space)  of
University  Business Center Phase II's  approximately  88,000 square feet of net
rentable  area (or 92%).  Of the total being  sub-leased,  approximately  69,000
square feet (or 85%) is being leased by Full Sail Recorders, Inc. ("Full Sail"),
a major tenant at University  Business  Center Phase I, a  neighboring  property
owned by an affiliate of the General  Partner of the  Partnership.  During 1994,
1995 and 1996,  Crosby continued to make rent payments  pursuant to the original
lease terms.  The Joint Venture has received  notice that Crosby does not intend
to pay full rental due under the original lease agreement from and after January
1997. The

                                     - 38 -

<PAGE>



Liquidity and Capital Resources - Continued
-------------------------------------------

rental  income  from  this  property   accounts  for  approximately  6%  of  the
partnerships  total revenues.  The Joint Venture has instituted  legal action to
seek resolution of this situation. Although the Joint Venture does not presently
have lease agreements  (except as noted below) with the sub-lessees noted above,
beginning  February  1997 rent  payments  from these  sublessees  are being made
directly  to the Joint  Venture.  The Joint  Venture  is  currently  negotiating
directly  with the  sub-lessees  to enter  into lease  agreements  for the space
presently sublet. At this time, all future leasing and tenant finish costs which
will be required to release this space are unknown except as noted below for the
negotiations with Full Sail.

In  December  1995,  Full  Sail  signed a 33 month  lease  with the L/U II Joint
Venture for approximately  41,000 square feet it currently sub-lease from Crosby
 . In November  1996,  Full Sail signed a lease  amendment  which  increased  the
square  footage from 41,000  square feet to 48,000  square feet and extended the
lease term from 33 months to 76 months.  In November 1996, Full Sail also signed
a 52 month lease for the remaining approximately 21,000 square feet it presently
sub-leases  from Crosby.  Both lease terms  commence  April 1998 when the Crosby
lease ends. As part of the lease negotiations, Full Sail will receive a total of
$450,000 in special  tenant  allowances  ($200,000  resulting  from the original
lease signed  December  1995 and  $250,000  resulting  from the lease  amendment
signed  November  1996).  Approximately  $92,000 of the total allowance is to be
reimbursed  by  Full  Sail  to  the  L/U II  Joint  Venture.  The  Partnership's
proportionate   share  of  the  net   commitment   ($450,000  less  $92,000)  is
approximately  $64,000 or 18%. The tenant  allowance  will be due and payable to
Full Sail pursuant to the previously mentioned lease agreements,  as appropriate
invoices for tenant finish costs  incurred by Full Sail are submitted to the L/U
II Joint Venture. The source of funds for this commitment is expected to be cash
flow from operations and/or cash reserves.

Subsequent  to December 31, 1996,  the L/U II Joint Venture made a commitment of
approximately  $55,000 for tenant  finish  improvements  at  Lakeshore  Business
Center  Phase I as a result of a lease  renewal  and  expansion.  The  expansion
increases the tenant's current leased space by  approximately  2,000 square feet
and  the  renewal   extends  the  lease  for  five  years.   The   Partnership's
proportionate  share of the  commitment  is  approximately  $10,000 or 18%.  The
project is  expected  to be  completed  during the second  quarter of 1997.  The
source of funds for this  project is  expected  to be cash flow from  operations
and/or cash reserves.

The  Partnership  had no other material  commitments  for renovations or capital
improvements as of December 31, 1996.

In the next 12 months, the demand on future liquidity is anticipated to increase
as the  Partnership  continues  its efforts in the leasing of the  Partnership's
commercial properties.  At this time, the future leasing and tenant finish costs
which will be required to renew current leases that expire during 1997 or obtain
new tenants are unknown.

The  primary  source of future  liquidity  and  distributions  is expected to be
derived from cash  generated by the  Partnership's  operating  properties  after
adequate  cash  reserves are  established  for future  leasing and tenant finish
costs.  It is anticipated  that the cash flow from  operations and cash reserves
will be sufficient to meet the needs of the Partnership.

On February 1, 1996, the Partnership  established an Interest Repurchase Reserve
in the amount of $297,450 pursuant to Section 16.4 of the Partnership's  Amended
and Restated  Agreement of Limited  Partnership.  Under  Section  16.4,  limited
partners may request the Partnership to repurchase  their  respective  interests
(Units)  in  the  Partnership.   With  this  Interest  Repurchase  Reserve,  the
Partnership was able to repurchase 1,983 Units at

                                     - 39 -

<PAGE>



Liquidity and Capital Resources - Continued
-------------------------------------------

a price of $150 per Unit.  The  Partnership  notified  the  limited  partners by
letter dated February 1, 1996 of the  establishment  of the Interest  Repurchase
Reserve and the opportunity to request that the Partnership  repurchase Units at
the established price.

On May 24,  1996,  the  Partnership  elected  to fund an  additional  amount  of
$277,620 to its Interest Repurchase  Reserve.  With these funds, the Partnership
will be able to  repurchase  an  additional  1,850  Units at a price of $150 per
Unit. Through December 31, 1996, 2,830 Units have been repurchased for $424,500.
Repurchased  Units are being retired by the  Partnership,  thus  increasing  the
share of ownership of each remaining  investor.  The Interest Repurchase Reserve
was funded from cash reserves.

Due to  uncertainties  involving  the  Crosby  lease  as  discussed  above,  the
Partnership  has taken the following  actions.  Subsequent to December 31, 1996,
the repurchase of limited  partnership Units has been indefinitely  interrupted.
Second,  effective December 30, 1996, distributions were indefinitely suspended.
Once it is clear that, in the general partner's opinion, the Partnership has the
necessary  cash reserves to meet future  leasing and tenant finish costs and has
rebuilt cash reserves to meet the ongoing needs of the Partnership,  the general
partner will determine whether to reinstitute repurchases and distributions.

The following  describes the efforts being taken by the  Partnership to increase
the occupancy levels at the Partnership's commercial properties. The leasing and
renewal negotiations at the Lakeshore Business Center development are handled by
an on-site leasing agent,  an employee of NTS Development  Company (an affiliate
of the  general  partner  of the  Partnership),  who  makes  calls to  potential
tenants,  negotiates  lease  renewals  with  current  tenants and manages  local
advertising  with the assistance of NTS Development  Company's  marketing staff.
The leasing and renewal  negotiations at University Business Center Phase II are
handled by a leasing agent, an employee of NTS Development  Company,  located at
the University Business Center development. The leasing and renewal negotiations
for the  Partnership's  remaining  commercial  properties are handled by leasing
agents, employees of NTS Development Company,  located in Louisville,  Kentucky.
The leasing  agents are located in the same city as commercial  properties.  All
advertising  for these  properties is coordinated by NTS  Development  Company's
marketing staff located in Louisville, Kentucky.

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

Leases at Commonwealth Business Center Phase I, Blankenbaker Business Center 1A,
University  Business Center Phase II and Lakeshore  Business Center Phases I and
II provide for tenants to contribute toward the payment of common area expenses,
insurance and real estate taxes.  Leases at Lakeshore  Business  Center Phases I
and II and University  Business  Center Phase II also provide for rent increases
which are based upon increases in the consumer price index.  Leases at Plainview
Point  Office  Center  Phases I and II and  Plainview  Point III  Office  Center
provide for tenants to contribute toward the payment of increases in common area
maintenance  expenses,  insurance,  utilities and real estate taxes. These lease
provisions,  along with the fact that  residential  leases are  generally  for a
period of one year, should protect the Partnership's  operations from the impact
of inflation and changing prices.

                                     - 40 -

<PAGE>




Liquidity and Capital Resources - Continued
-------------------------------------------

The L/U II Joint  Venture  owns  approximately  6 acres of land  adjacent to the
Lakeshore  Business  Center  development  in  Ft.   Lauderdale,   Florida.   The
Partnership's  proportionate interest at December 31, 1996 in the asset held for
sale is $297,251.  The contract for sale which was  previously  disclosed in the
Partnership's  Form 10-K for the year ended December 31, 1995 has been cancelled
by the  purchaser  due to the fact that  bids for  construction  exceeded  funds
available.  The Joint Venture continues to actively market the land for sale. In
management's opinion, the net book value approximates the fair market value less
cost to sell.

Some of the statements included in Item 7, Management's  Discussion and Analysis
of  Financial  Condition  and Results of  Operations,  may be  considered  to be
"forward looking  statements" since such statements relate to matters which have
not yet occurred.  For example,  phrases such as "the Partnership  anticipates",
"believes"  or  "  expects"   indicate  that  it  is  possible  that  the  event
anticipated,  believed or expected may not occur.  Should such events not occur,
then the result which the Partnership  expected also may not occur or occur in a
different  manner,  which may be more or less favorable to the Partnership.  The
Partnership does not undertake any obligations to publicly release the result of
any revisions to these forward  looking  statements  that may be made to reflect
any future events or circumstances.

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

The Partnership's principal activity is the leasing and management of commercial
office  buildings,   business  centers  and  apartment  complexes.  If  a  major
commercial  tenant  or a large  number of  apartment  lessees  default  on their
leases,  the  Partnership's   ability  to  make  payments  due  under  its  debt
agreements,  payment of operating costs and other partnership  expenses would be
directly  impacted.  A lessees  ability to make  payments  are  subject to risks
generally  associated with real estate,  many of which are beyond the control of
the Partnership,  including general or local economic  conditions,  competition,
interest rates, real estate tax rates, other operating expenses and acts of God




















                                     - 41 -

<PAGE>





Item 8.  Financial Statements and Supplementary Data


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To NTS-Properties IV,

We have  audited  the  accompanying  balance  sheets  of  NTS-Properties  IV, (a
Kentucky limited partnership), as of December 31, 1996 and 1995, and the related
statements of operations,  partners' equity and cash flows for each of the three
years in the period ended December 31, 1996. These financial  statements and the
schedules  referred  to  below  are  the  responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of  NTS-Properties  IV as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended  December 31, 1996 in conformity
with generally accepted accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements  taken  as a whole.  The  schedules  included  on pages 64
through 67 are  presented  for purposes of  complying  with the  Securities  and
Exchange  Commission's  rules and are not a required part of the basic financial
statements.  These  schedules  have been  subjected to the  auditing  procedures
applied in the audits of the basic  financial  statements  and, in our  opinion,
fairly state in all  material  respects the  financial  data  required to be set
forth therein in relation to the basic financial statements taken as a whole.




                                              ARTHUR ANDERSEN LLP


Louisville, Kentucky
February 25, 1997


                                     - 42 -

<PAGE>

<TABLE>


                                NTS-PROPERTIES IV

                                 BALANCE SHEETS

                        AS OF DECEMBER 31, 1996 AND 1995

<CAPTION>


                                                         1996           1995
                                                     ------------    -----------

ASSETS

<S>                                                  <C>             <C>
Cash and equivalents                                 $   346,479     $   276,610
Cash and equivalents - restricted                         68,193          61,308
Investment securities                                       --           404,587
Accounts receivable, net of allowance
 for doubtful accounts of $7,551 (1996)
 and $15,854 (1995)                                      347,133         431,772
Land, buildings and amenities, net                    13,801,251      14,617,818
Asset held for sale                                      297,251         297,251
Other assets                                             545,979         556,442
                                                     -----------     -----------

                                                     $15,406,286     $16,645,788
                                                     ===========     ===========

LIABILITIES AND PARTNERS' EQUITY

Mortgages and notes payable                          $11,236,625     $11,592,641
Accounts payable - operations                            136,332         212,597
Accounts payable - construction                            5,831          36,167
Distributions payable                                       --            90,136
Security deposits                                         83,911          83,995
Other Liabilities                                         26,412          17,303
                                                     -----------     -----------

                                                      11,489,111      12,032,839

Commitments and Contingencies

Partners' equity                                       3,917,175       4,612,949
                                                     -----------     -----------

                                                     $15,406,286     $16,645,788
                                                     ===========     ===========
</TABLE>


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


                                     - 43 -

<PAGE>

<TABLE>


                                NTS-PROPERTIES IV

                            STATEMENTS OF OPERATIONS

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<CAPTION>


                                                    1996                    1995                    1994
                                                    ----                    ----                    ----
<S>                                             <C>                     <C>                     <C>
 Rental income, net of provision for
  doubtful accounts of $0(1996),
  $12,018 (1995) and $2,546 (1994)              $ 3,544,153             $ 3,231,420             $ 2,451,192
 Interest and other income                           33,401                  54,010                 144,107
                                                -----------             -----------             -----------

                                                  3,577,554               3,285,430               2,595,299
Expenses:
 Operating expenses                                 662,463                 604,846                 513,760
 Operating expenses - affiliated                    371,856                 395,570                 400,350
 Write-off of unamortized tenant
  and building improvements                           6,871                  31,636                  47,633
 Write-off of unamortized loan costs                 12,896                    --                      --
 Amortization of capitalized leasing
  costs                                              20,908                  26,645                  20,150
 Interest expense                                   940,941                 979,241                 674,348
 Management fees                                    204,165                 186,176                 136,786
 Real estate taxes                                  220,956                 215,165                 154,462
 Professional and administrative
  expenses                                           94,799                 203,990                 161,804
 Professional and administrative
  expenses - affiliated                             171,778                 138,737                 133,988
 Depreciation and amortization                      916,102                 929,909                 658,233
                                                -----------             -----------             -----------

                                                  3,623,735               3,711,915               2,901,514
                                                -----------             -----------             -----------

Net loss                                        $   (46,181)            $  (426,485)            $  (306,215)
                                                ===========             ===========             ===========

Net loss allocated to the limited
 partners                                       $   (45,719)            $  (422,220)            $  (303,153)
                                                ===========             ===========             ===========

Net loss per limited partnership
 unit                                           $     (1.63)            $    (14.19)            $    (10.19)
                                                ===========             ===========             ===========

Weighted average number of limited
 partnership units                                   28,012                  29,745                  29,745
                                                ===========             ===========             ===========

</TABLE>

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


                                     - 44 -

<PAGE>

<TABLE>


                                NTS-PROPERTIES IV

                         STATEMENTS OF PARTNERS' EQUITY

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<CAPTION>


                                        Limited        General
                                        Partners       Partners        Total
                                        --------       --------        -----
<S>                                   <C>            <C>            <C>
Balances at December 31, 1993         $ 6,995,469    $  (190,212)   $ 6,805,257

 Net loss                                (303,153)        (3,062)      (306,215)

 Distributions declared                  (344,447)        (3,479)      (347,926)
                                      -----------    -----------    -----------

Balances at December 31, 1994           6,347,869       (196,753)     6,151,116

 Net loss                                (422,220)        (4,265)      (426,485)

 Distributions declared                (1,100,565)       (11,117)    (1,111,682)
                                      -----------    -----------    -----------

Balances at December 31, 1995           4,825,084       (212,135)     4,612,949

 Net loss                                 (45,719)          (462)       (46,181)

 Distributions declared                  (222,842)        (2,251)      (225,093)

 Repurchase of limited partnership
  Units                                  (424,500)          --         (424,500)
                                      -----------    -----------    -----------

Balances at December 31, 1996         $ 4,132,023    $  (214,848)   $ 3,917,175
                                      ===========    ===========    ===========

</TABLE>

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


                                     - 45 -

<PAGE>
<TABLE>



                                NTS-PROPERTIES IV

                            STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>


                                                             1996                 1995                  1994
                                                        ------------          ------------          ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                     <C>                   <C>                   <C>
Net loss                                                $   (46,181)          $  (426,485)          $  (306,215)
Adjustments to reconcile net loss to net
 cash provided by (used in) operating
 activities:
  Accrued interest on investment securities                   3,642                (3,642)                 --
  Provision for doubtful accounts                              --                  12,018                 2,546
  Write-off of unamortized tenant and building
   improvements                                               6,871                31,636                47,633
  Write-off of unamortized loan costs                        12,896                  --                    --
  Amortization of capitalized leasing costs                  20,908                26,645                20,150
  Depreciation and amortization                             916,102               929,909               658,233
  Changes in assets and liabilities:
   Cash and equivalents - restricted                         (8,834)              (22,993)              (17,601)
   Accounts receivable                                       84,639               260,173              (154,962)
   Other assets                                              13,366                 5,821              (123,496)
   Accounts payable - operations                            (76,265)               80,942              (138,902)
   Security deposits                                            (84)                2,644                 2,615
   Other liabilities                                          9,109               (81,341)              (17,512)
                                                        -----------           -----------           -----------
  Net cash provided by (used in) operating
   activities                                               936,169               815,327               (27,511)
                                                        -----------           -----------           -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and amenities                 (108,563)             (433,655)             (621,785)
Decrease (increase) in cash and equivalents -
 restricted                                                   2,450                (2,450)                 --
Purchase of investment securities                              --                (698,227)                 --
Maturity of investment securities                           400,945               297,282                  --
                                                        -----------           -----------           -----------

  Net cash provided by (used in)investing
   activities                                               294,832              (837,050)             (621,785)
                                                        -----------           -----------           -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Increase in mortgages payable                             3,105,900                  --               4,373,993
Principal payments on mortgages and notes
 payable                                                 (3,461,916)             (354,010)           (5,065,734)
Capital contribution to a joint venture                        --                (616,125)             (597,357)
Cash distributions                                         (315,228)           (1,111,683)             (343,720)
Additions to loan costs                                     (64,888)              (25,823)              (94,490)
Repurchase of limited partnership Units                    (424,500)                 --                    --
Increase in cash and equivalents - restricted                  (500)                 --                    --
                                                        -----------           -----------           -----------

  Net cash used in financing activities                  (1,161,132)           (2,107,641)           (1,727,308)
                                                        -----------           -----------           -----------

  Net increase (decrease) in cash and
   equivalents                                               69,869            (2,129,364)           (2,376,604)

CASH AND EQUIVALENTS, beginning of year                     276,610             2,405,974             4,782,578
                                                        -----------           -----------           -----------

CASH AND EQUIVALENTS, end of year                       $   346,479           $   276,610           $ 2,405,974
                                                        ===========           ===========           ===========

Interest paid on a cash basis                           $   950,760           $   978,622           $   697,905
                                                        ===========           ===========           ===========


The accompanying notes to financial statements are an integral part of these statements
</TABLE>

                                     - 46 -

<PAGE>




                                NTS-PROPERTIES IV

                          NOTES TO FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

1.     Significant Accounting Policies
       -------------------------------

       A)    Organization
             ------------

             NTS-Properties  IV (the  "Partnership")  is a  limited  partnership
             organized under the laws of the Commonwealth of Kentucky on May 13,
             1983.  The  general  partner  is  NTS-Properties  Associates  IV, a
             Kentucky limited partnership. The Partnership is in the business of
             developing,   constructing,   owning  and   operating   residential
             apartments and commercial real estate.

       B)    Properties
             ----------

             The Partnership owns and operates the following properties:

             -  Commonwealth  Business  Center  Phase I, a business  center with
                approximately  57,000 net rentable  ground floor square feet and
                approximately  24,000  net  rentable  mezzanine  square  feet in
                Louisville, Kentucky

             -  Plainview  Point Office Center Phases I and II, an office center
                with   approximately   56,000  net   rentable   square  feet  in
                Louisville, Kentucky

             -  The Willows of Plainview Phase I, a 118-unit luxury apartment
                complex in Louisville, Kentucky

             -  A 10% joint venture  interest in The Willows of Plainview  Phase
                II, a 144-unit luxury apartment complex in Louisville, Kentucky

             -  A 4% joint venture interest in Golf Brook Apartments, a 195-unit
                luxury apartment complex in Orlando, Florida

             -  A 5% joint  venture  interest  in  Plainview  Point  III  Office
                Center, an office center with approximately  62,000 net rentable
                square feet in Louisville, Kentucky

             -  A 30% joint venture interest in Blankenbaker Business Center 1A,
                a business center with approximately  50,000 net rentable ground
                floor  square  feet  and   approximately   50,000  net  rentable
                mezzanine square feet in Louisville, Kentucky.

             -  An 18% joint  venture  interest in the  Lakeshore/University  II
                Joint  Venture.  A description  of the  properties  owned by the
                Joint Venture appears below:

                -   Lakeshore  Business  Center Phase I - a business center with
                    approximately  103,000  rentable square feet located in Fort
                    Lauderdale, Florida.

                -   Lakeshore  Business Center Phase II - a business center with
                    approximately  97,000 net  rentable  square feet  located in
                    Fort Lauderdale, Florida.





                                     - 47 -

<PAGE>



1.     Significant Accounting Policies - Continued
       -------------------------------------------

       B)    Properties - Continued
             ----------------------


                -   University Business Center Phase II - a business center with
                    approximately  78,000 net rentable  first floor  (office and
                    service)   and  second   floor   office   square   feet  and
                    approximately  10,000 net  rentable  mezzanine  square  feet
                    located in Orlando, Florida.

                -   Outparcel  Building  Sites  -  approximately  6.2  acres  of
                    undeveloped  land adjacent to the Lakeshore  Business Center
                    development which is zoned for commercial development.


       C)    Allocation of Net Income (Loss) and Cash Distributions
             ------------------------------------------------------

             Net Cash Receipts made  available for  distribution,  as defined in
             the  partnership  agreement,  will  be  distributed  1)  99% to the
             limited  partners and 1% to the general  partner  until the limited
             partners have received their 8% Preference  Distribution as defined
             in the  partnership  agreement;  2) to the  general  partner  in an
             amount  equal to  approximately  10% of the  limited  partners'  8%
             Preference  Distribution;  and 3) the remainder, 90% to the limited
             partners  and 10% to the general  partner.  Starting  December  31,
             1996, the Partnership has indefinitely interrupted distributions.

             Net Cash Proceeds, as defined in the partnership  agreement,  which
             are available for  distribution  will be  distributed 1) 99% to the
             limited  partners and 1% to the general  partner  until the limited
             partners  have  received  distributions  from all sources  equal to
             their  Original  Capital plus the amount of any deficiency in their
             8% Cumulative Distribution as defined in the partnership agreement;
             and 2) the  remainder,  75% to the limited  partners and 25% to the
             general partner.

             Net income (loss) is to be allocated to the limited partners and to
             the general partner based on cash distributions made.

       D)    Tax Status
             ----------

             The  Partnership  has received a ruling from the  Internal  Revenue
             Service  stating that the  Partnership  is  classified as a limited
             partnership   for  federal  income  tax  purposes.   As  such,  the
             Partnership makes no provision for income taxes. The taxable income
             or loss is passed through to the holders of interests for inclusion
             on their individual income tax returns.


                           (Notes continued next page)











                                     - 48 -

<PAGE>



1.    Significant Accounting Policies - Continued
      -------------------------------------------

      D) Tax Status - Continued
      ----------------------

      A reconciliation  of net  loss  for  financial  statement  purposes versus
      that for income tax reporting is as follows:


                                          1996        1995        1994
                                       ----------  ----------  ----------
           Net loss                    $ (46,181)  $(426,485)  $(306,215)
           Items handled differently
            for tax purposes:
             Depreciation and
              amortization               (18,531)    (18,448)   (304,209)
             Capitalized leasing
              costs                          111       6,635         637
             Rental income                75,494      73,129      17,451
             Write-off of unamortized
              tenant improvements        (15,890)    (12,556)    (56,757)
             Allowance for doubtful
              accounts                    (8,303)     12,104      (6,140)
                                       ---------   ---------   ---------

           Taxable loss                $ (13,300)  $(365,621)  $(655,233)
                                       =========   =========   =========



       E)    Use of Estimates in the Preparation of Financial Statements
             -----------------------------------------------------------

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

       F)    Joint Venture Accounting
             ------------------------

             The Partnership has adopted the proportionate  consolidation method
             of  accounting  for joint  venture  properties.  The  Partnership's
             proportionate  interest  in  the  venture's  assets,   liabilities,
             revenues,  expenses and cash flows are  combined on a  line-by-line
             basis with the Partnership's own assets, liabilities,  revenues and
             expenses and cash flows. All intercompany accounts and transactions
             have been eliminated in consolidation.

             Proportionate  consolidation  is utilized by the Partnership due to
             the  fact  that  the  ownership  of joint  venture  properties,  in
             substance,  is not subject to joint control.  The managing  general
             partners  of the sole  partner  of the NTS  sponsored  partnerships
             which have formed joint  ventures are  substantially  the same.  As
             such,   decisions  regarding   financing,   development,   sale  or
             operations  do not require  the  approval  of  different  partners.
             Additionally,   the  joint  venture  properties  are  in  the  same
             business/industry  as their  respective  joint venture partners and
             their asset,  liability,  revenue and expense  accounts  correspond
             with the accounts of such partners. It is the belief of the general
             partner of the Partnership that the financial statement disclosures
             resulting  from  proportionate   consolidation  provides  the  most
             meaningful presentation of assets, liabilities,  revenues, expenses
             and cash flows for the years presented given the commonality of the
             Partnership's operations.

                                     - 49 -

<PAGE>



1.     Significant Accounting Policies - Continued
       -------------------------------------------

       G)    Cash and Equivalents - Restricted
             ---------------------------------

             Cash and  equivalents  - restricted  represent  funds  received for
             residential  security  deposits and funds which have been  escrowed
             with  mortgage  companies  for  property  taxes  and  insurance  in
             accordance with the loan agreements.

             Cash and  equivalents  -  restricted  at  December  31,  1995  also
             included  escrow  funds  which  were  to  be  released  as  capital
             expenditures,  leasing  commissions  and tenant  improvements  were
             incurred at the  properties  owned by the  Lakeshore/University  II
             Joint Venture. In 1996, these escrow funds were released.

       H)    Investment Securities
             ---------------------

             Investment  securities  represent  investments in  Certificates  of
             Deposit or securities  issued by the U.S.  Government  with initial
             maturities  of  greater  than three  months.  The  investments  are
             carried at cost which  approximates  market value.  The Partnership
             intends to hold the  securities  until  maturity.  During  1995 and
             1996, the Partnership sold no investment securities. As of December
             31, 1996, the Partnership held no investment securities.

             The following  provides  details  regarding the investments held at
             December 31, 1995:

                                       Amortized     Maturity     Value At
                         Type            Cost          Date       Maturity
                         ----            ----          ----       --------

             Certificate of Deposit    $153,537      01/05/96     $153,646
             Certificate of Deposit     102,336      02/02/96      102,809
             FNMA Discount Note         148,714      02/28/96      150,000
                                        -------                    -------

                                       $404,587                   $406,455
                                        =======                    =======

             The  Partnership   held  no  investment   securities  with  initial
             maturities greater than three months during 1994.


       I)    Basis of Property and Depreciation
             ----------------------------------

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

             Statement  of  Financial   Accounting  Standards  (SFAS)  No.  121,
             Accounting  for the  Impairment of Long-Lived  Assets and for Long-
             Lived Assets to be Disposed Of,  specifies  circumstances  in which
             certain long-lived assets must be reviewed for impairment.  If such
             review  indicates that the carrying  amount of an asset exceeds the
             sum of its expected future cash flows,  the asset's  carrying value
             must be written  down to fair  market  value.  Application  of this
             standard  during the year ended December 31, 1996 did not result in
             an impairment loss.





                                     - 50 -

<PAGE>



1.     Significant Accounting Policies - Continued
       -------------------------------------------

       J)    Rental Income and Capitalized Leasing Costs
             -------------------------------------------

             Certain of the  Partnership's  lease  agreements for the commercial
             properties are  structured to include  scheduled and specified rent
             increases  over the lease term. For financial  reporting  purposes,
             the income from these leases is being recognized on a straight-line
             basis over the lease  term.  Accrued  income  connected  with these
             leases is included in accounts receivable and totalled $264,019 and
             $333,744 at December 31, 1996 and 1995, respectively.

             All  commissions  paid to commercial  leasing agents and incentives
             paid to tenants are deferred and amortized on a straight-line basis
             over the  applicable  lease term. In addition,  certain other costs
             associated   with  the  initial   leasing  of  the  properties  are
             capitalized and amortized over a five year period.


       K)    Advertising
             -----------

             The  Partnership  expenses   advertising-type  costs  as  incurred.
             Advertising  expense was immaterial to the  Partnership  during the
             years ended December 31, 1996, 1995 and 1994.

       L)    Statements of Cash Flows
             ------------------------

             For purposes of reporting cash flows, cash and equivalents  include
             cash on hand and short-term, highly liquid investments with initial
             maturities of three months or less.

       M)    Reclassification of 1995 and 1994 Financial Statements
             ------------------------------------------------------

             Certain  reclassifications  have been made to the December 31, 1995
             and 1994  financial  statements  to conform with  December 31, 1996
             classifications.   These   reclassifications   have  no  effect  on
             previously reported operations.

2.     Concentration of Credit Risk
       ----------------------------

       NTS-Properties IV owns and operates commercial  properties in Louisville,
       Kentucky, Orlando, Florida and Ft. Lauderdale, Florida. Substantially all
       of the Partnership's tenants are local businesses or are businesses which
       have operations in the location in which they lease space. In Louisville,
       Kentucky, one tenant occupies 100% of the Blankenbaker Business Center 1A
       property.  The  Partnership  also  owns and  operates,  either  wholly or
       through a joint venture,  residential properties in Louisville,  Kentucky
       and Orlando,  Florida.  The  apartment  unit is generally  the  principal
       residence of the tenant.

3.     Interest Repurchase Reserve
       ---------------------------

       On February 1, 1996, the Partnership  established an Interest  Repurchase
       Reserve  in the  amount  of  $297,450  pursuant  to  Section  16.4 of the
       Partnership's  Amended and  Restated  Agreement  of Limited  Partnership.
       Under  Section  16.4,  limited  partners may request the  Partnership  to
       repurchase their respective  interests  (Units) in the Partnership.  With
       these funds,  the  Partnership  was able to  repurchase  1,983 Units at a
       price of $150 per Unit. The Partnership  notified the limited partners by
       letter  dated  February  1,  1996 of the  establishment  of the  Interest
       Repurchase  Reserve and the  opportunity to request that the  Partnership
       repurchase Units at the established price.



                                     - 51 -

<PAGE>



3.     Interest Repurchase Reserve - Continued
       ---------------------------------------

       On May 24, 1996, the Partnership  elected to fund an additional amount of
       $277,620 to its  Interest  Repurchase  Reserve.  With this  funding,  the
       Partnership  will be able to repurchase  an  additional  1,850 Units at a
       price of $150 per Unit.  Through December 31, 1996, 2,830 Units have been
       repurchased  for  $424,500.  Repurchased  Units are being  retired by the
       Partnership,  thus  increasing  the share of ownership of each  remaining
       investor.  Subsequent to December 31, 1996, the Partnership  indefinitely
       interrupted the repurchase of Partnership Units.

4.     Investment in Joint Ventures
       ----------------------------

       A)    NTS/Willows Phase II Joint Venture
             ----------------------------------

             In 1984,  the  Partnership  entered into a joint venture  agreement
             with  NTS-Properties  V, an affiliate of the general partner of the
             Partnership,  to develop and construct a 144-unit luxury  apartment
             complex on an 8.29-acre site in  Louisville,  Kentucky known as The
             Willows of Plainview  Phase II. The  Partnership  contributed  land
             valued at $800,000 and  NTS-Properties V contributed  approximately
             $7,455,000,  the  construction  and carrying costs of the apartment
             complex.  The project was  completed in August 1985.  Net income or
             net loss is allocated each calendar quarter based on the respective
             partnership's  contribution.  The Partnership's ownership share was
             10% at December  31,  1996.  The  Partnership's  share of the joint
             venture's net operating income was $6,623 (1996), $4,233 (1995) and
             $8,320 (1994).

       B)    NTS Ft. Lauderdale Office Joint Venture
             ---------------------------------------

             In 1985,  the  Partnership  entered into a joint venture  agreement
             with   NTS-Properties  V  to  develop  an   approximately   103,000
             square-foot  commercial business center known as Lakeshore Business
             Center  Phase  I,  located  in  Fort   Lauderdale,   Florida.   The
             Partnership   contributed   land  valued  at  $1,752,982  and  NTS-
             Properties  V  contributed  approximately  $9,170,000,  the cost of
             constructing  and leasing the building.  The net income or net loss
             was  allocated  each  calendar  quarter  based  on  the  respective
             partnership's  contribution.  The Partnership's  share of the joint
             venture's  net  operating  income  was $2,085  (1995)  and  $18,060
             (1994).

             On January 23, 1995, the partners of the NTS Ft.  Lauderdale Office
             Joint Venture contributed  Lakeshore Business Center Phase I to the
             newly formed  Lakeshore/University II (L/U II) Joint Venture. Refer
             to Note 4F for a further discussion of the new joint venture.

       C)    NTS Sabal Golf Villas Joint Venture
             -----------------------------------

             In 1985,  the  Partnership  entered into a joint venture  agreement
             with  NTS-Properties VI, an affiliate of the general partner of the
             Partnership,  to develop and construct a 158-unit luxury  apartment
             complex on a 13.15-acre site in Orlando, Florida to be known as the
             Golf Brook  Apartments  Phase I. The Partnership  contributed  land
             valued at $1,900,000 with an outstanding  note payable to a bank of
             $1,200,000  which was secured by the land. On January 1, 1987,  the
             joint   venture   agreement  was  amended  to  include  Golf  Brook
             Apartments Phase II, a 37-unit luxury apartment  complex located on
             a 3.069-acre site adjacent to Golf Brook  Apartments  Phase I. NTS-
             Properties VI contributed  approximately $15.8 million, the cost of
             constructing  and leasing  the  complexes.  NTS-Properties  VI also
             contributed  funds to retire  the  $1,200,000  note  payable to the
             bank.

                                     - 52 -

<PAGE>




4.     Investment in Joint Ventures - Continued
       ----------------------------------------

       C)    NTS Sabal Golf Villas Joint Venture - Continued
             -----------------------------------------------

             Net  income  or net  loss  is  allocated  based  on the  respective
             contribution  of each  partnership  as of the end of each  calendar
             quarter.  The Partnership's  ownership share was 4% at December 31,
             1996. The Partnership's  share of the joint venture's net operating
             income was $42,329 (1996), $43,768 (1995) and $33,744 (1994).

       D)    Plainview Point III Joint Venture
             ---------------------------------

             In 1987,  the  Partnership  entered into a joint venture  agreement
             with  NTS-Properties  VI to develop and construct an  approximately
             62,000 square foot office building located in Louisville,  Kentucky
             to be known  as  Plainview  Point  Phase  III  Office  Center.  The
             Partnership contributed land valued at $790,000 with an outstanding
             note  payable to a bank of $550,000  which was secured by the land.
             NTS-Properties VI contributed  approximately $4.1 million, the cost
             to  construct  and  lease  the  building.  NTS-Properties  VI  also
             contributed  funds to retire the $550,000 note payable to the bank.
             Net  income  or net  loss  is  allocated  based  on the  respective
             partnership's  contribution as of the end of each calendar quarter.
             The Partnership's  ownership share was 5% at December 31, 1996. The
             Partnership's  share of the joint  venture's net  operating  income
             (loss) was $(1,668) (1996), $648 (1995) and $(3,075) (1994).

       E)    Blankenbaker Business Center Joint Venture
             ------------------------------------------

             On August 16, 1994, the Blankenbaker  Business Center Joint Venture
             agreement  was  amended  to  admit  the  Partnership  to the  Joint
             Venture.  The Joint Venture was  originally  formed on December 28,
             1990 between NTS-Properties Plus Ltd. and NTS-Properties VII, Ltd.,
             affiliates of the general  partner of the  Partnership,  to own and
             operate   Blankenbaker   Business  Center  1A  and  to  acquire  an
             approximately  2.49 acre  parking lot that was being  leased by the
             business center from an affiliate of the general  partner.  The use
             of the parking lot is a provision of the tenants's  lease agreement
             with the business center.

             In  accordance  with the Joint  Venture  Agreement  Amendment,  the
             Partnership  contributed  $1,100,000 and  NTS-Properties  VII, Ltd.
             contributed  $500,000.  The  general  partner  of  the  Partnership
             determined the utilization of a portion of the  Partnership's  cash
             reserves to  participate  in the Joint  Venture would be consistent
             with the  investment  objectives  set  forth  in the  Partnership's
             partnership agreement, and should enhance the future returns of the
             Partnership.

             The need for  additional  capital by the Joint Venture was a result
             of the lease renewal and expansion  which was signed April 28, 1994
             between  the Joint  Venture and  Prudential  Service  Bureau,  Inc.
             ("Prudential").  The lease  expands  Prudential's  leased  space by
             approximately 15,000 square feet and extends its current lease term
             through  July  2005.   Approximately  12,000  square  feet  of  the
             expansion  was into new space  which had to be  constructed  on the
             second level of the existing business center.  With this expansion,
             Prudential now occupies 100% of the business center  (approximately
             101,000 square feet). The tenant finish and leasing costs connected
             with the  lease  renewal  and  expansion  were  approximately  $1.4
             million.



                                     - 53 -

<PAGE>



4.     Investment in Joint Ventures - Continued
       ----------------------------------------

       E)    Blankenbaker Business Center Joint Venture - Continued
             ------------------------------------------------------

             In  order  to  calculate  the  revised  joint  venture   percentage
             interests,  the  assets  of the  Joint  Venture  were  revalued  in
             connection with the admission of the Partnership as a joint venture
             partner and the additional capital contributions.  The value of the
             Joint Venture's assets  immediately prior to the additional capital
             contributions   was  $6,764,322  and  its   outstanding   debt  was
             $4,650,042,  with  net  equity  being  $2,114,280.  The  difference
             between  the value of the Joint  Venture's  assets and the value at
             which they were carried on the books of the Joint  Venture has been
             allocated to NTS-Properties  VII, Ltd. and NTS-Properties Plus Ltd.
             in determining each Joint Venture partner's percentage interest.

             As a result of its capital contribution, the Partnership obtained a
             30%  interest  in the Joint  Venture.  NTS-Properties  Plus  Ltd.'s
             interest in the Joint Venture decreased from 69% to 39% as a result
             of the capital  contributions made by NTS-Properties  VII, Ltd. and
             the Partnership.  NTS-Properties  VII, Ltd.'s interest in the Joint
             Venture remained at 31%.

             Net  income  or net  loss  is  allocated  based  on the  respective
             contribution  of each  partnership  as of the end of each  calendar
             quarter. The Partnership's  ownership share was 30% at December 31,
             1996. The Partnership's  share of the joint venture's net operating
             loss was $46,438 (1996), $60,080 (1995) and $119,449 (1994).

       F)    Lakeshore/University II Joint Venture
             -------------------------------------

             On   January   23,   1995,   a   new   joint   venture   known   as
             Lakeshore/University  II Joint  Venture (L/U II Joint  Venture) was
             formed among the Partnership and  NTS-Properties V,  NTS-Properties
             Plus Ltd. and NTS/Fort Lauderdale,  Ltd., affiliates of the general
             partner  of the  Partnership,  for  purposes  of  owning  Lakeshore
             Business Center Phases I and II,  University  Business Center Phase
             II  and  certain  undeveloped  tracts  adjacent  to  the  Lakeshore
             Business  Center  development.  The table  below  identifies  which
             properties  were  contributed  to the L/U II Joint  Venture and the
             respective  owners of such properties prior to the formation of the
             joint venture.

             Property (Net Asset Contributed)            Contributing Owner
             --------------------------------            ------------------

             Lakeshore Business Center               NTS-Properties IV and NTS-
             Phase I ($6,249,667)                    Properties V

             Lakeshore Business Center               NTS-Properties Plus Ltd.
             Phase II (-$1,023,535)

             Undeveloped land adjacent to the        NTS-Properties Plus Ltd.
             Lakeshore Business Center
             development (3.8 acres)(-$670,709)

             Undeveloped land adjacent to the        NTS/Fort Lauderdale, Ltd.
             Lakeshore Business Center
             development (2.4 acres)($27,104)

             University Business Center              NTS-Properties V and NTS-
             Phase II ($953,236)                     Properties Plus Ltd.




                                     - 54 -

<PAGE>



4.     Investment in Joint Ventures - Continued
       ----------------------------------------

       F)    Lakeshore/Univeristy II Joint Venture - Continued
             -------------------------------------------------

             Each of the properties were contributed to the L/U II Joint Venture
             subject to existing  indebtedness,  except for  Lakeshore  Business
             Center Phase I which was  contributed to the joint venture free and
             clear of any mortgage liens, and all such  indebtedness was assumed
             by the L/U II joint  venture.  Mortgages were recorded on Lakeshore
             Business  Center  Phase  I in  the  amount  of  $5,500,000,  and on
             University Business Center Phase II in the amount of $3,000,000, in
             favor of the  banks  which  held  the  indebtedness  on  University
             Business  Center Phase II,  Lakeshore  Business Center Phase II and
             the undeveloped tracts prior to the formation of the joint venture.
             In addition to the above, the Partnership also contributed $750,000
             to the L/U II Joint Venture. The Partnership's  ownership share was
             18% at December  31,  1996.  The  Partnership's  share of the joint
             venture's  net  operating  loss was  $176,357  (1996) and  $220,756
             (1995).

5.     Land, Buildings and Amenities
       -----------------------------

       The  following   schedule  provides  an  analysis  of  the  Partnership's
       investment in property held for lease as of December 31:


                                               1996         1995
                                           -----------   -----------

           Land and improvements           $ 5,551,101   $ 5,521,041
           Buildings and improvements       18,529,087    18,567,171
           Amenities                           228,450       223,800
                                           -----------   -----------

                                            24,308,638    24,312,012

           Less accumulated depreciation    10,507,387     9,694,194
                                           -----------   -----------

                                           $13,801,251   $14,617,818
                                           ===========   ===========

6.     Asset Held for Sale
       -------------------

       The L/U II Joint Venture owns approximately 6.2 acres of land adjacent to
       the Lakeshore Business Center development in Ft. Lauderdale,  Florida. In
       management's  opinion,  the net book value  approximates  the fair market
       value less cost to sell.

7.     Mortgages and Notes Payable
       ---------------------------

       Mortgages and notes payable as of December 31 consist of the following:

                                                       1996             1995
                                                    -----------     -----------
       Mortgage payable with an insurance
       company,  bearing interest at a fixed
       rate of 8.8%, due October 1, 2004,
       secured by land and building                 $ 2,467,606     $ 2,677,397

       Mortgage payable with an insurance
       company, bearing interest at a fixed
       rate of 7%, due December 5, 2003,
       secured by land, buildings and
       amenities                                      2,012,389       2,043,653

                              (Continued next page)



                                     - 55 -

<PAGE>




7. Mortgages and Notes Payable - Continued
------------------------------------------

                                                  1996                 1995
                                              -----------          -----------
Mortgage payable with an insurance
company,  bearing interest at a fixed
rate of 7%, due December 5, 2003
secured by land, building and
amenities                                     $ 1,916,561          $ 1,946,336

Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.5%, due November 15, 2005,
secured by land and building                    1,262,767            1,353,672

Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.125% due August 1, 2008,
secured by land and building                    1,057,548               --

Mortgage payable with an insurance
company bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building                    1,013,666               --

Mortgage payable with an insurance
company bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building                      982,949               --

Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 7.5%, due December 5, 2003,
secured by land, buildings and
amenities                                         327,573              337,832

Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 7.5%, due December 5, 2003,
secured by land, buildings and
amenities                                         195,566              201,691

Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land
and building                                       --                1,642,914

Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land
and building                                       --                1,024,590

Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land              --                  220,269

Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land              --                   83,597

Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land              --                   60,690
                                               ----------           ----------
                                              $11,236,625          $11,592,641
                                               ==========           ==========



                                     - 56 -

<PAGE>




7.     Mortgages and Notes Payable - Continued
       ---------------------------------------

       The  mortgages  are payable in monthly  installments  of  $135,640  which
       includes principal, interest, insurance escrow and property tax escrow.

       Scheduled maturities of debt are as follows:

       For the Years Ended December 31,                     Amount
       --------------------------------                     ------

                            1997                         $   565,363
                            1998                             614,276
                            1999                             667,441
                            2000                             725,231
                            2001                             788,048
                         Thereafter                        7,876,266
                                                         -----------
                                                         $11,236,625
                                                         ===========


       Based on the borrowing rates  currently  available to the Partnership for
       mortgages  with similar terms and average  maturities,  the fair value of
       long-term debt is approximately $12,800,000.

8.     Rental Income Under Operating Leases
       ------------------------------------

       The  following  is  a  schedule  of  minimum   future  rental  income  on
       noncancellable operating leases as of December 31, 1996:

       For the Years Ended December 31,                   Amount
       --------------------------------                   ------

                            1997                       $ 1,706,315
                            1998                         1,388,423
                            1999                         1,191,229
                            2000                         1,006,334
                            2001                           837,042
                         Thereafter                      2,422,240
                                                        ----------

                                                       $ 8,551,583
                                                       ===========


9.     Related Party Transactions
       --------------------------

       Property management fees of $204,165 (1996), $186,176 (1995) and $136,786
       (1994) were paid to NTS Development  Company, an affiliate of the general
       partner of the Partnership. The fee is equal to 5% of gross revenues from
       residential   properties  and  6%  of  gross  revenues  from   commercial
       properties pursuant to an agreement with the Partnership. As permitted by
       an  agreement,   NTS  Development  Company  will  receive  a  repair  and
       maintenance  fee equal to 5.9% of costs  incurred which relate to capital
       improvements. The Partnership has incurred repair and maintenance fees of
       $7,770 (1996) and $17,895 (1995) and has capitalized  this cost as a part
       of land,  buildings  and  amenities.  An agreement  also provides for NTS
       Development  Company  to  receive a fee equal to 1% of Net Cash  Proceeds
       from the refinancing of any Partnership property.  During 1994, a $41,000
       refinancing fee was paid to NTS Development  Company and capitalized as a
       loan cost (other assets).  The fee will be amortized over the life of the
       mortgages  (permanent  financings on The Willows of Plainview Phase I) to
       which the fee relates.






                                     - 57 -

<PAGE>



9.     Related Party Transactions - Continued
       --------------------------------------

       As  permitted  by an  agreement,  the  Partnership  was also  charged the
       following  amounts  from NTS  Development  Company  for the  years  ended
       December 31, 1996, 1995 and 1994.  These charges include items which have
       been  expensed as operating  expenses - affiliated  or  professional  and
       administrative   expenses  -   affiliated   and  items  which  have  been
       capitalized as other assets or as land, buildings and amenities.



                                    1996       1995       1994
                                  --------   --------   --------

               Leasing            $108,913   $115,557   $155,619
               Administrative      214,530    178,910    167,814
               Property manager    241,289    253,574    234,636
               Other                 8,674      9,291     17,427
                                  --------   --------   --------

                                  $573,406   $557,332   $575,496
                                  ========   ========   ========


       On January 23, 1995, the Partnership  contributed  $750,000 to the L/U II
       Joint Venture. For details regarding this transaction, refer to Note 4F.

       On  August  16,  1994,  the  Partnership  contributed  $1,100,000  to the
       Blankenbaker  Business  Center  Joint  Venture.  The  Joint  Venture  was
       originally formed on December 28, 1990 between  NTS-Properties  Plus Ltd.
       and  NTS-Properties  VII, Ltd.,  affiliates of the general  partner.  For
       details regarding this transaction, refer to Note 4E.


10.    Commitments and Contingencies
       -----------------------------

       Philip Crosby Associates,  Inc.  ("Crosby") has leased 100% of University
       Business  Center Phase I. The original  lease term is for seven years and
       the tenant took occupancy in April 1991.  During the years ended December
       31,  1994,  1995 and 1996,  Crosby  sub-leased  a portion of the business
       center. Currently, Crosby has sub-leased,  through the end of their lease
       term,  approximately  81,000 square feet (including  approximately 10,000
       square feet of mezzanine space) of University  Business Center Phase II's
       approximately  88,000  square feet of net rentable  area (or 92%). Of the
       total  being  sub-leased,  approximately  69,000  square feet (or 85%) is
       being leased by Full Sail Recorders,  Inc. ("Full Sail"),  a major tenant
       at University Business Center Phase I, a neighboring property owned by an
       affiliate of the General  Partner of the  Partnership.  During 1994, 1995
       and 1996, Crosby continued to make rent payments pursuant to the original
       lease terms.  The Joint Venture has received  notice that Crosby does not
       intend to pay full rental due under the original lease agreement from and
       after  January 1997.  The rental  income from this property  accounts for
       approximately 18% of the partnerships  total revenues.  The Joint Venture
       has  instituted  legal  action  to seek  resolution  of  this  situation.
       Although  the Joint  Venture  does not  presently  have lease  agreements
       (except as noted  below)  with the  sub-lessees  noted  above,  beginning
       February 1997 rent payments from these sublessees are being made directly
       to the Joint Venture. The Joint Venture is currently negotiating directly
       with the  sub-lessees  to  enter  into  lease  agreements  for the  space
       presently  sublet.  At this time,  all future  leasing and tenant  finish
       costs which will be required to release this space are unknown  except as
       noted below for the negotiations with Full Sail.



                                     - 58 -

<PAGE>



10.    Commitments and Contingencies - Continued
       -----------------------------------------

       In December 1995, Full Sail signed a 33 month lease with the L/U II Joint
       Venture for approximately  41,000 square feet it currently  sublease from
       Crosby.  In  November  1996,  Full Sail  signed a lease  amendment  which
       increased  the square  footage from 41,000  square feet to 48,000  square
       feet and extended the lease term from 33 months to 76 months. In November
       1996,  Full  Sail  also  signed  a  52  month  lease  for  the  remaining
       approximately  21,000  square feet it presently  sub-leases  from Crosby.
       Both lease terms  commence April 1998 when the Crosby lease ends. As part
       of the lease negotiations,  Full Sail will receive a total of $450,000 in
       special  tenant  allowances  ($200,000  resulting from the original lease
       signed  December  1995 and $250,000  resulting  from the lease  amendment
       signed November 1996). Approximately $92,000 of the total allowance is to
       be reimbursed by Full Sail to the L/U II Joint Venture. The Partnership's
       proportionate  share of the net  commitment  ($450,000  less  $92,000) is
       approximately  $64,000  or  18%.  The  tenant  allowance  will be due and
       payable  to  Full  Sail  pursuant  to  the  previously   mentioned  lease
       agreements,  as appropriate  invoices for tenant finish costs incurred by
       Full Sail are submitted to the L/U II Joint Venture.  The source of funds
       for this  commitment is expected to be cash flow from  operations  and/or
       cash reserves.






























                                     - 59 -

<PAGE>



Item 9.Changes in and Disagreements with Accountants on Accounting and
       ---------------------------------------------------------------
Financial Disclosure
--------------------

N/A


                                    PART III

Item 10.Directors and Executive Officers of the Registrant
        --------------------------------------------------

Because the Partnership is a limited  partnership and not a corporation,  it has
no  directors  or  officers  as  such.  Management  of  the  Partnership  is the
responsibility  of  the  general  partner,  NTS-Properties  Associates  IV.  The
Partnership has entered into a management contract with NTS Development Company,
an affiliate of the general partner, to provide property management services.

The general partners of NTS-Properties Associates IV are as follows:

J. D. Nichols
-------------

Mr.  Nichols  (age  55)  is  the  managing  general  partner  of  NTS-Properties
Associates IV and is Chairman of the Board of NTS  Corporation  (since 1985) and
NTS Development Company (since 1977).

NTS Capital Corporation
-----------------------

NTS Capital Corporation (formerly NTS Corporation) is a Kentucky corporation
formed in October 1979.  At the present time its capital is $1,000 and it
is not anticipated that such capital will be significantly increased.  J.
D. Nichols is Chairman of the Board and the sole director of NTS Capital
Corporation.

NTS Subpartnership IV
---------------------

NTS  Subpartnership IV is a Kentucky limited  partnership whose primary business
purpose is to acquire, own and hold an interest in NTS-Properties Associates IV.
The partners of NTS  Subpartnership IV include various  management  personnel of
NTS Corporation and its affiliates.

Alliance Realty Corporation
---------------------------

Alliance Realty Corporation was formed in September 1982, and is a wholly-
owned subsidiary of SN Alliance, Inc.  SN Alliance, Inc. is also the parent
corporation of Stifel, Nicolaus & Company, Inc. which acted as the Dealer
Manager in connection with the offering for the interests.

The Manager of the Partnership's properties is NTS Development Company, the
executive officers and/or directors of which are Messrs. J. D. Nichols,
Richard L. Good and John W. Hampton.

Richard L. Good
---------------

Mr. Good, (age 57) President and Chief Operating  Officer of NTS Corporation and
President  of  NTS  Development  Company  and  Chairman  of  the  Board  of  NTS
Securities, Inc., joined the Manager in January 1985. From 1981 through 1984, he
was Executive Vice President of Jacques-Miller, Inc., a real estate syndication,
property management and financial planning firm in Nashville, Tennessee.






                                     - 60 -

<PAGE>



Item 10. Directors and Executive Officers of the Registrant- Continued
         -------------------------------------------------------------

John W. Hampton
---------------

Mr.  Hampton,  (age  47)  is  Senior  Vice  President  of NTS  Corporation  with
responsibility for all accounting operations.  Before joining NTS in March 1991,
Mr.  Hampton was Vice  President - Finance  and Chief  Financial  Officer of the
Sturgeon-Thornton-Marrett  Development Company in Louisville,  Kentucky for nine
years. Prior to that he was with Alexander Grant & Company CPA's. Mr. Hampton is
a Certified  Public  Accountant  and a graduate of the  University of Louisville
with a Bachelor of Science  degree in  Commerce.  He is a member of the American
Institute of CPA's and the Kentucky Society of CPA's.

Item 11.Management Remuneration and Transactions
        ----------------------------------------

The officers and/or directors of the corporate general partner receive no direct
remuneration in such  capacities.  The Partnership is required to pay a property
management fee based on gross rentals to NTS Development  Company,  an affiliate
of  the  general  partner.  The  Partnership  is  also  required  to  pay to NTS
Development  Company a repair and  maintenance  fee on costs related to specific
projects and a refinancing  fee on Net Cash Proceeds from the refinancing of any
Partnership  property.  Also, NTS  Development  Company  provides  certain other
services to the Partnership.  See Note 9 to the financial  statements which sets
forth  transactions  with  affiliates of the general partner for the years ended
December 31, 1996, 1995 and 1994.

The general partner is entitled to receive cash distributions and allocations of
profits and losses from the Partnership. See Note 1C to the financial statements
which  describes  the methods  used to  determine  income  allocations  and cash
distributions.

Item 12.Security Ownership of Certain Beneficial Owners and Management
        --------------------------------------------------------------

The  general  partner  is  NTS-Properties  Associates  IV,  a  Kentucky  limited
partnership,  10172 Linn Station Road, Louisville,  Kentucky 40223. The partners
of the general partner and their total respective interests in
NTS-Properties Associates IV are as follows:

       J. D. Nichols                                     69.69%
       10172 Linn Station Road
       Louisville, Kentucky 40223

       NTS Subpartnership IV                             30.00%
       10172 Linn Station Road
       Louisville, Kentucky 40223

       NTS Capital Corporation                             .30%
       10172 Linn Station Road
       Louisville, Kentucky 40223

       Alliance Realty Corporation                         .01%
       500 North Broadway
       St. Louis, Missouri 63102

Item 13.      Certain Relationships and Related Transactions
              ----------------------------------------------

Property management fees of $204,165 (1996), $186,176 (1995) and $136,786 (1994)
were paid to NTS Development Company, an affiliate of the general partner of the
Partnership.  The  fee  is  equal  to  5% of  gross  revenues  from  residential
properties and 6% of gross revenues from  commercial  properties  pursuant to an
agreement with the  Partnership.  As permitted by an agreement,  NTS Development
Company will receive a repair and maintenance fee


                                     - 61 -

<PAGE>



Item 13. Certain Relationships and Related Transactions - Continued
         ----------------------------------------------------------

equal to 5.9% of costs  incurred  which  relate  to  capital  improvements.  The
Partnership  has  incurred  repair  and  maintenance  fees of $7,770  (1996) and
$17,895  (1995)and has  capitalized  this cost as a part of land,  buildings and
amenities.  An agreement also provides for NTS Development  Company to receive a
fee equal to 1% of Net Cash Proceeds  from the  refinancing  of any  Partnership
property. During 1994, a $41,000 refinancing fee was paid to NTS Development and
capitalized  as a loan cost (other  assets).  The fee will be amortized over the
life of the mortgages (permanent financings on The Willows of Plainview Phase I)
to which the fee relates.

As permitted by an  agreement,  the  Partnership  was also charged the following
amounts from NTS Development Company for the years ended December 31, 1996, 1995
and 1994.  These  charges  include  items which have been  expensed as operating
expenses - affiliated or professional and  administrative  expenses - affiliated
and items which have been capitalized as other assets or as land,  buildings and
amenities.




                                    1996      1995        1994
                                  --------   --------   --------

               Leasing            $108,913   $115,557   $155,619
               Administrative      214,530    178,910    167,814
               Property manager    241,289    253,574    234,636
               Other                 8,674      9,291     17,427
                                  --------   --------   --------

                                  $573,406   $557,332   $575,496
                                  ========   ========   ========


On January 23, 1995, the  Partnership  contributed  $750,000 to the L/U II Joint
Venture.  For  details  regarding  this  transaction,  refer  to  Note 4F of the
Partnership's  1996  financial  statements  and  Items  1. and 2.  Business  and
Properties.

On August 16, 1994, the Partnership  contributed  $1,100,000 to the Blankenbaker
Business  Center  Joint  Venture.  The Joint  Venture was  originally  formed on
December 28, 1990 between NTS-Properties Plus Ltd. and NTS-Properties VII, Ltd.,
affiliates of the general partner of the Partnership. For details regarding this
transaction  refer to Note 4E of the 1996 financial  statements and Items 1. and
2. Business and Properties.

There are no other  agreements or  relationships  between the  Partnership,  the
General Partner and its affiliates than those previously described.

                                     - 62 -

<PAGE>



                                     PART IV

Item 14.      Exhibits, Financial Statement Schedules, and Reports on Form 8-K
              ----------------------------------------------------------------

1.      Financial statements

        The financial statements for the years ended December 31, 1996, 1995 and
        1994 together with the report of Arthur  Andersen LLP dated February 25,
        1997,  appear in Item 8. The  following  financial  statement  schedules
        should be read in conjunction with such financial statements.

2.      Financial statement schedules

        Schedules:                                                    Page No.

        III-Real Estate and Accumulated Depreciation                   64-67

        All other  schedules have been omitted  because they are not applicable,
        are not required, or because the required information is included in the
        financial statements or notes thereto.

3.      Exhibits

        Exhibit No.                                                    Page No.

         3.      Amended and Restated Agreement and Certificate           *
                 of Limited Partnership of NTS-Properties IV

        10.      Property Management Agreement and Construction           *
                 Management Agreement between NTS Development
                 Company and NTS-Properties IV

        27.      Financial Data Schedule                               Included
                                                                       herewith

         *       Incorporated   by  reference   to  documents   filed  with  the
                 Securities  and  Exchange  Commission  in  connection  with the
                 filing of the  Registration  Statements on Form S-11 on May 16,
                 1983  (effective  August 1,  1983)  under  Commission  File No.
                 2-83771.

4.      Reports on Form 8-K

        Form  8-K was  filed  December  23,  1996 to  report  in Item 5 that the
        Partnership  has received  notice that Philip  Crosby  Associates,  Inc.
        (Crosby) does not intend to pay full rental due under its lease from and
        after  January  1997.  Crosby  leases  the  majority  of  the  space  in
        University   Business   Center   Phase   II,   which  is  owned  by  the
        Lakeshore/University  II  Joint  Venture.  The  Partnership  has  an 18%
        interest in this Joint Venture.

                                     - 63 -

<PAGE>

<TABLE>


                                NTS-PROPERTIES IV

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             AS OF DECEMBER 31, 1996


<CAPTION>


                                              Commonwealth        Plainview
                                                Business        Point Office      The Willows    The Willows
                                                 Center        Center Phases     of Plainview    of Plainview
                                                 Phase I         I and II          Phase I         Phase II
                                                 -------         --------          -------         --------
<S>                                            <C>              <C>              <C>              <C>
Encumbrances                                          (A)             None              (B)              (B)

Initial cost to partnership:
  Land                                         $  928,867       $  356,048       $1,798,292       $  170,808
  Buildings and improvements                    1,419,653        2,214,001        5,447,513          585,917

Cost capitalized subsequent to
 acquisition:
  Improvements                                  1,690,747          871,455          165,454           54,129
  Other                                              --               --               --               --
  Carrying costs                                     --               --               --               --

Gross amount at which carried
 December 31, 1996:
  Land                                         $  939,987       $  454,262       $1,832,605       $  180,573
  Buildings and improvements                    3,099,280        2,987,242        5,578,654          630,281
                                               ----------       ----------       ----------       ----------

  Total                                        $4,039,267       $3,441,504       $7,411,259       $  810,854
                                               ==========       ==========       ==========       ==========

Accumulated depreciation                       $2,095,688       $1,334,022       $3,336,201       $  361,892
                                               ==========       ==========       ==========       ==========

Date of construction                                06/84              N/A            03/85            08/85

Date Acquired                                         N/A            04/84              N/A              N/A

Life at which depreciation in
 latest income statement is
 computed                                             (C)              (C)              (C)              (C)

<FN>


(A)     First mortgage held by an insurance company.

(B)     First mortgage held by two insurance companies.

(C)     Depreciation  is  computed  using  the  straight-line  method  over  the
        estimated  useful  lives of the assets  which are 10 - 30 years for land
        improvements,  5 - 30 years for  buildings and  improvements  and 5 - 30
        years for amenities.
</FN>
</TABLE>

                                     - 64 -

<PAGE>


<TABLE>

                                NTS-PROPERTIES IV

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             AS OF DECEMBER 31, 1996


<CAPTION>


                                                                                                Lakeshore
                                                              Plainview       Blankenbaker       Business
                                            Golf Brook        Point III        Business           Center
                                            Apartments      Office Center      Center 1A         Phase I
                                            ----------      -------------      ---------         -------
<S>                                        <C>               <C>              <C>              <C>
Encumbrances                                      (A)              None              (A)              (A)

Initial cost to partnership:
  Land                                     $  175,557        $   65,211       $  582,561       $  422,983
  Buildings and improvements                  474,566           116,284        2,263,506          662,259

Cost capitalized subsequent to
 acquisition:
  Improvements                                   (289)           50,192           92,355          529,494
  Other (B)                                      --                --               --            184,250
  Carrying costs                                 --                --               --               --

Gross amount at which carried
 December 31, 1996:
  Land                                     $  175,445        $   66,373       $  672,364       $  479,210
  Buildings and improvements                  474,389           165,314        2,266,058        1,319,776
                                           ----------        ----------       ----------       ----------

  Total                                    $  649,834        $  231,687       $2,938,422       $1,798,986
                                           ==========        ==========       ==========       ==========

Accumulated depreciation                   $  213,184        $   83,238       $  978,801       $  839,565
                                           ==========        ==========       ==========       ==========

Date of construction                            05/88             01/88              N/A            05/86

Date Acquired                                     N/A               N/A            08/94              N/A

Life at which depreciation in
 latest income statement is
 computed                                         (C)               (C)              (C)              (C)

<FN>

(A)     First mortgage held by an insurance company.

(B)     Represents  NTS-Properties IV's increased interest in Lakeshore Business
        Center Phase I as a result of the formation of the  Lakeshore/University
        II Joint Venture in 1995.

(C)     Depreciation  is  computed  using  the  straight-line  method  over  the
        estimated  useful  lives of the assets  which are 10 - 30 years for land
        improvements,  5 - 30 years for  buildings and  improvements  and 5 - 30
        years for amenities.
</FN>
</TABLE>

                                     - 65 -

<PAGE>

<TABLE>


                                NTS-PROPERTIES IV

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             AS OF DECEMBER 31, 1996

<CAPTION>



                                                         Lakeshore     University
                                                         Business       Business
                                                          Center         Center        Total
                                                         Phase II       Phase II    Pages 64-66
                                                         --------       --------    -----------
<S>                                                    <C>           <C>           <C>
Encumbrances                                                   (A)           (A)

Initial cost to partnership:
  Land                                                 $   658,760   $   388,156   $ 5,547,243
  Buildings and improvements                             1,508,328     1,567,339    16,259,366

Cost capitalized subsequent to
 acquisition:
  Improvements                                              22,973          --       3,476,510
  Other                                                       --            --         184,250
  Carrying costs                                              --            --            --

Gross amount at which carried
 December 31, 1996 (B):
  Land                                                 $   658,760   $   388,156   $ 5,847,735
  Buildings and improvements                             1,531,301     1,567,339    19,619,634
                                                       -----------   -----------   -----------

  Total                                                $ 2,190,061   $ 1,955,495   $25,467,369
                                                       ===========   ===========   ===========

Accumulated depreciation                               $   754,498   $   510,298   $10,507,387
                                                       ===========   ===========   ===========

Date of construction                                           N/A           N/A

Date Acquired                                                01/95         01/95

Life at which depreciation in
 latest income statement is
 computed                                                      (C)           (C)

<FN>

(A)     First mortgage held by an insurance company.

(B)     Aggregate cost of real estate for tax purposes is $24,653,822.

(C)     Depreciation  is  computed  using  the  straight-line  method  over  the
        estimated  useful  lives of the assets  which are 10 - 30 years for land
        improvements,  5 - 30 years for  buildings and  improvements  and 5 - 30
        years for amenities.

(D)     Total gross cost at December 31, 1996                                           $25,467,369
        Adjust land contribution from fair
         market value to cost:
          Golfbrook Apartments                                                             (662,731)
          Plainview Point III Office Center                                                (496,000)
                                                                                        -----------

                                                                                        $24,308,638
                                                                                        ===========
</FN>
</TABLE>


                                     - 66 -

<PAGE>

<TABLE>


                                NTS-PROPERTIES IV

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<CAPTION>


                                                  Real              Accumulated
                                                 Estate             Depreciation
                                                 ------             ------------

<S>                                            <C>                 <C>
Balances at December 31, 1993                  $ 16,701,992        $  6,893,625

Additions during period:
 Improvements                                       743,561             643,256
 Depreciations (a)                                     --                  --
 Other (b)                                        2,846,067             732,346

Deductions during period:
 Retirements                                       (488,168)           (439,975)
                                               ------------        ------------

Balances at December 31, 1994                    19,803,452           7,829,252

Additions during period:
 Improvements                                       298,146                --
 Depreciation (a)                                      --               896,863
 Other (c)                                        4,306,835           1,032,864
Deductions during period:
 Retirements                                        (96,421)            (64,785)
                                               ------------        ------------

Balances at December 31, 1995                    24,312,012           9,694,194

Additions during period:
 Improvements                                        73,741                --
 Depreciation (a)                                      --               883,436

Deductions during period:
 Retirements                                        (77,115)            (70,243)
                                               ------------        ------------

Balances at December 31, 1996                  $ 24,308,638        $ 10,507,387
                                               ============        ============

<FN>


(a)    The additions  charged to accumulated  depreciation on this schedule will
       differ from the  depreciation  and amortization on the Statements of Cash
       Flows due to the amortization of loan costs.
(b)    Represents the  Partnership's  share of  Blankenbaker  Business Center 1A
       Joint  Venture  land  and  buildings  recorded  under  the  proportionate
       consolidation method.
(c)    Represents  the  increase  in the  Partnership's  interest  in  Lakeshore
       Business Center Phase I land and buildings and the Partnership's share of
       Lakeshore Business Center Phase II's and University Business Center Phase
       II's land and buildings  recorded under the  proportionate  consolidation
       method. All are the result of the formation of the
       Lakeshore/University II Joint Venture in 1995.
</FN>
</TABLE>

                                     - 67 -

<PAGE>




                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  NTS-Properties  IV has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                NTS-PROPERTIES IV
                                   (Registrant)
                                BY:   NTS-Properties Associates IV,
                                      General Partner
                                      BY:    NTS Capital Corporation,
                                             General Partner


                                             /s/ John W. Hampton
                                                 John W. Hampton
                                                 Senior Vice President



Date:      March  27  , 1997


Pursuant to the  requirements  of the Securities and Exchange Act of 1934,  this
Form  10-K has been  signed  below by the  following  persons  on  behalf of the
registrant in their capacities and on the date indicated above.

       Signature                   Title
       ---------                   -----

/s/ J. D. Nichols                  General Partner of NTS-Properties
    J. D. Nichols                  Associates IV and Chairman of the
                                   Board and Sole Director of
                                   NTS Capital Corporation

/s/ Richard L. Good                President of NTS Capital Corporation
    Richard L. Good


/s/ John W. Hampton                Senior Vice President of NTS Capital
    John W. Hampton                Corporation



The Partnership is a limited  partnership and no proxy material has been sent to
the limited partners.

















                                     - 68 -