Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements in Item 1 and the cautionary statements below.

Critical Accounting Policies

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

Results of Operations

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

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

The following tables include certain selected summarized operating data for the three months ended March 31, 2009 and 2008. This data should be read in conjunction with our financial statements, including the notes attached hereto.

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




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

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

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

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

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

Three Months Ended March 31,

                  2009               2008
Commercial               68 %               75 %
Multifamily              92 %               93 %
Retail                   99 %               98 %
Land                    N/A                N/A

We believe the changes in average occupancy from period to period are temporary effects of each property's specific mix of lease maturities and are not indicative of any known trend or uncertainty.

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

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

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

Rental Income and Tenant Reimbursements

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

Operating Expenses and Operating Expenses Reimbursed to Affiliate

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

Operating expenses reimbursed to affiliate from continuing operations for the three months ended March 31, 2009 and 2008 were approximately $1.2 million and $1.1 million, respectively. The increase of $0.1 million, or 9%, was primarily due to reimbursing NTS Development Company for the employees of our 2008 acquisition.

We do not have any employees. Pursuant to our management agreement, NTS Development Company employs the individuals who provide services necessary to operate our properties and conduct our business. NTS Development Company provides employees that may also perform services for other properties and business enterprises. In the situation where a particular employee benefits multiple operations, the employee's cost is

proportionately charged out to the entity receiving the services. We only reimburse charges from NTS Development Company for actual costs of employee services incurred for our benefit. The cost of services provided to us by NTS Development Company's employees are classified in our consolidated Statements of Operations as "Operating expenses reimbursed to affiliate". The services provided by others are classified as "Operating expenses".

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

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

                                 (Unaudited)
                         Three Months Ended March 31,
                           2009               2008
Property              $       776,000    $       681,000
Multifamily Leasing           130,000            114,000
Administrative                254,000            246,000
Other                          12,000             14,000

Total                 $     1,172,000    $     1,055,000

Management Fees

Management fees from continuing operations for the three months ended March 31, 2009 and 2008 were approximately $0.5 million and $0.5 million, respectively. For the three months ended March 31, 2009 and 2008, there were no material offsetting changes in management fees.

Pursuant to our management agreement, NTS Development Company receives property management fees equal to 5% of the gross collected revenue from our wholly-owned properties. NTS Development Company receives property management fees from our properties owned as a tenant in common with an unaffiliated third party equal to 3.5% of their gross collected revenue under separate management agreements. We were the beneficiary of a preferential ownership interest, disproportionately greater than our initial cash investment in each property owned as a tenant in common with an unaffiliated third party. NTS Development Company has agreed to accept a lower management fee for the properties we own as a tenant in common with an unaffiliated third party in exchange for a larger potential disposition fee. Disposition fees of up to 6% of the gross sales price may be paid to NTS Development Company for the sale of one of our properties owned as a tenant in common with an unaffiliated third party. Management fees are calculated as a percentage of cash collections and are recorded on the accrual basis. As a result, the fluctuations in revenue between years will differ from the fluctuations of management fee expense.

Property Taxes and Insurance

Property taxes and insurance from continuing operations for the three months ended March 31, 2009 and 2008 were approximately $1.5 million and $1.1 million, respectively. The increase of $0.4 million, or 36%, was primarily due to a $0.3 million increase in property taxes and insurance from our 2008 acquisition along with increased property tax expense of $0.1 million at Castle Creek Apartments, Lake Clearwater Apartments and the Lakes Apartments as a result of increased property tax assessments. We are continuing to appeal the property tax assessments on these properties located in Marion County, Indiana. There can be no assurance these appeals will be successful.

Professional and Administrative Expenses and Professional and Administrative Expenses Reimbursed to Affiliate

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

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

We do not have any employees. Pursuant to our management agreement, NTS Development Company employs the individuals who provide services necessary to operate our properties and conduct our business. NTS Development Company provides employees that may also perform services for other properties and business enterprises. In the situation where a particular employee benefits multiple operations, the employee's cost is proportionately charged out to the entity receiving the services. We only reimburse charges from NTS Development Company for actual costs of employee services incurred for our benefit. The cost of services provided to us by NTS Development Company's employees are classified in our consolidated Statements of Operations as "Professional and administrative expenses reimbursed to affiliate". The services provided by others are classified as "Professional and administrative".

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

Professional and administrative expenses reimbursed to affiliate from continuing operations consisted approximately of the following:

                          2009               2008
Finance              $        89,000    $       103,000
Accounting                   187,000            216,000
Investor Relations            79,000             78,000
Human Resources                4,000              5,000
Overhead                      34,000             37,000

Total                $       393,000            439,000

Depreciation and Amortization

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

Interest Expense

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

Loss on Disposal of Assets

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

Loss From Investments in Tenants in Common

Loss from investments in tenants in common for the three months ended March 31, 2009 and 2008 includes the net operating loss attributable to our investments in tenants in common with an unaffiliated third party. The properties are The Overlook at St. Thomas Apartments and Creek's Edge at Stony Point Apartments.

Discontinued Operations

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

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

Liquidity and Capital Resources

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

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

                                                  (Unaudited)
                                          Three Months Ended March 31,
                                            2009               2008
Operating activities                   $     1,187,000    $     2,812,000
Investing activities                          (302,000 )       (1,415,000 )
Financing activities                          (597,000 )         (634,000 )

Net increase in cash and equivalents   $       288,000            763,000

Cash Flow from Operating Activities

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

Cash Flow from Investing Activities

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

Cash Flow from Financing Activities

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

Future Liquidity

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

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

Pursuant to leasing agreements signed by March 31, 2009, we are obligated to incur expenditures of approximately $1.0 million funded by borrowings on our debt during the next twelve months primarily for renovations and tenant origination costs necessary to continue leasing our properties. These costs could increase materially if we are successful in leasing space in Sears Office Building. This discussion of future liquidity details our material commitments. We intend to renew our note payable and mortgage payable coming due in the next twelve months with the existing lenders.

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

Property Transactions

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

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

We may engage in transactions structured as "like kind exchanges" of property to obtain favorable tax treatment under Section 1031 of the Internal Revenue Code. If we are able to structure an exchange of properties as a "like kind exchange," then any gain we realize from the exchange would not be recognized for federal income tax purposes. The test for determining whether exchanged properties are of "like kind" is whether the properties are of the same nature or character.

Website Information

Information concerning NTS Realty Holdings Limited Partnership is available through the NTS Development Company website (www.ntsdevelopment.com). Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to
Section 13(a) of the Securities Exchange Act are available and may be accessed free of charge through the "Investor Services" section of our website as soon as reasonably practicable after we electronically file this material with, or furnish it to, the SEC. Our website and the information contained therein or connected thereto are not incorporated into this quarterly report on Form 10-Q.